Working Paper: NBER ID: w10176
Authors: Torsten Persson; Gérard Roland; Guido Tabellini
Abstract: We present a theoretical model of a parliamentary democracy, where party structures, government coalitions and fiscal policies are endogenously determined. The model predicts that, relative to proportional elections, majoritarian elections reduce government spending because they reduce party fragmentation and, therefore, the incidence of coalition governments. Party fragmentation can persist under majoritarian rule if party supporters are unevenly distributed across electoral districts. Economic and political data, from up to 50 post-war parliamentary democracies, strongly support our joint predictions from the electoral rule, to the party system, to the type of government, and to government spending.
Keywords: No keywords provided
JEL Codes: H00; D72; D78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Majoritarian elections (D79) | reduced government spending (H59) |
| Proportional elections (D72) | increased government spending (H59) |
| Majoritarian elections (D79) | less party fragmentation (D79) |
| less party fragmentation (D79) | reduced likelihood of coalition governments (D72) |
| Coalition governments (D79) | higher government spending (H59) |
| Proportional elections (D72) | incidence of coalition governments increases (D79) |
| geographical heterogeneity (R12) | party strength and coalition formation (D71) |