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Adjustments in Different Government Systems

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  • Enrico Spolaore

Abstract

This paper develops a model in which agents have a conflict of interest over what instrument to use for policy adjustment in response to shocks. Three different government systems are analyzed: cabinet systems, in which one decision-maker has full control over adjustment policies; consensus systems, in which adjustment policies must be agreed upon by all agents; and checks-and-balances systems, in which one agent decides what instrument should be used for adjustment, but the remaining agents may veto its use. All three systems may lead to inefficient policies. The cabinet system adjusts too often. The other systems may fail to adjust when adjustment is optimal. The relative performance of the three systems depends on the degree of political fragmentation and the size distribution of shocks. Copyright Blackwell Publishing Ltd 2004.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Economics & Politics.

Volume (Year): 16 (2004)
Issue (Month): 2 (07)
Pages: 117-146

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Handle: RePEc:bla:ecopol:v:16:y:2004:i:2:p:117-146

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Cited by:
  1. César Martinelli & Raúl Escorza, 2005. "When Are Stabilizations Delayed? Alesina-Drazen Revisited," Levine's Bibliography 122247000000000667, UCLA Department of Economics.
  2. Maria Manuel Pinho, 2008. "The political economy of public spending composition: evidence from a panel of OECD countries," FEP Working Papers 295, Universidade do Porto, Faculdade de Economia do Porto.
  3. Alessandro Riboni, 2013. "Ideology and endogenous constitutions," Economic Theory, Springer, vol. 52(3), pages 885-913, April.
  4. Marcela Eslava & Oskar Nupia, 2010. "Political Fragmentation and Government Spending: Bringing Ideological Polarization into the Picture," DOCUMENTOS CEDE 006713, UNIVERSIDAD DE LOS ANDES-CEDE.
  5. Carlos Scartascini & Mariano Tommasi & Ernesto Stein, 2010. "Veto Players and Policy Trade-Offs- An Intertemporal Approach to Study the Effects of Political Institutions on Policy," Research Department Publications 4660, Inter-American Development Bank, Research Department.
  6. Eric Dubois & Matthieu Leprince & Sonia Paty, 2007. "The Effects of Politics on Local Tax Setting: Evidence from France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00800688, HAL.
  7. Gerard Rpland, 2001. "The Political Economy of Transition," William Davidson Institute Working Papers Series 413, William Davidson Institute at the University of Michigan.
  8. Bortolotti, Bernardo & Cambini, Carlo & Rondi, Laura, 2013. "Reluctant regulation," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 804-828.
  9. Tao Li, 2014. "Expert advising under checks and balances," Social Choice and Welfare, Springer, vol. 42(2), pages 477-502, February.
  10. Heiner Felix Mikosch & Silke Übelmesser, 2007. "Staatsverschuldungsunterschiede im internationalen Vergleich und Schlussfolgerungen für Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(4), pages 309-334, November.
  11. Alberto Alesina & Silvia Ardagna & Francesco Trebbi, 2006. "Who Adjusts and When? On the Political Economy of Reforms," NBER Working Papers 12049, National Bureau of Economic Research, Inc.
  12. Maria Manuel Pinho, 2004. "Political models of budget deficits: a literature review," FEP Working Papers 138, Universidade do Porto, Faculdade de Economia do Porto.

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