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How Do Electoral Rules Shape Party Structures, Government Coalitions, and Economic Policies?

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  • Torsten Persson
  • Gerard 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.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-01/cesifo1_wp1115.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1115.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1115

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Keywords: electoral rules; party systems; coalition governments; fiscal policy; electoral accountability;

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  1. Antonio Merlo & Daniel Diermeier & Hülya Eraslan, 2004. "Bicameralism and Government Formation," Working Papers, Fondazione Eni Enrico Mattei 2004.81, Fondazione Eni Enrico Mattei.
  2. Persson, Torsten & Tabellini , Guido, 1997. "Political Economics and Macroeconomic Policy," Seminar Papers, Stockholm University, Institute for International Economic Studies 630, Stockholm University, Institute for International Economic Studies.
  3. Diermeier, Daniel & Merlo, Antonio, 1998. "Government turnover in parliamentary democracies," Bulletins, University of Minnesota, Economic Development Center 7453, University of Minnesota, Economic Development Center.
  4. David Austen-Smith, 2000. "Redistributing Income under Proportional Representation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(6), pages 1235-1269, December.
  5. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262661926, December.
  6. Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, Econometric Society, vol. 71(1), pages 27-70, January.
  7. Torsten Persson & Guido Tabellini & Francesco Trebbi, 2003. "Electoral Rules and Corruption," Journal of the European Economic Association, MIT Press, MIT Press, vol. 1(4), pages 958-989, 06.
  8. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(5), pages 997-1032, October.
  9. Besley, Timothy J. & Coate, Stephen, 2000. "Elected Versus Appointed Regulators: Theory And Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2381, C.E.P.R. Discussion Papers.
  10. Persson, Torsten & Roland, Gérard & Tabellini, Guido, 1997. "Comparative Politics and Public Finance," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1737, C.E.P.R. Discussion Papers.
  11. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  12. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, American Economic Association, vol. 94(1), pages 25-45, March.
  13. David P. Baron & Daniel Diermeier, 2001. "Elections, Governments, And Parliaments In Proportional Representation Systems," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(3), pages 933-967, August.
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