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Electoral Rules and Government Spending in Parliamentary Democracies

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  • Torsten Persson
  • Gerard Roland
  • Guido Tabellini

Abstract

We present a theoretical model of a parliamentary democracy where electoral competition inside coalition governments induces higher spending than under single party governments. Policy preferences of parties are endogenous and derived from opportunistic reelection motives. The electoral rule affects government spending, but only indirectly: proportional elections induce a more fragmented party system and a larger incidence of coalition governments than do majoritarian elections. Empirical evidence from post-war parliamentary democracies strongly supports these predictions.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 321307000000000249.

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Date of creation: 31 Jul 2006
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Handle: RePEc:cla:levarc:321307000000000249

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  1. Stephen Coate & Timothy Besley, 2000. "Elected versus Appointed Regulators: Theory and Evidence," NBER Working Papers 7579, National Bureau of Economic Research, Inc.
  2. Diermeier, Daniel & Merlo, Antonio, 1998. "Government Turnover in Parliamentary Democracies," Working Papers, C.V. Starr Center for Applied Economics, New York University 98-31, C.V. Starr Center for Applied Economics, New York University.
  3. 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.
  4. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(6), pages 1121-1161, December.
  5. Torsten Persson & Gerard Roland & Guido Tabellini, 2004. "How Do Electoral Rules Shape Party Structures, Government Coalitions, and Economic Policies?," CESifo Working Paper Series 1115, CESifo Group Munich.
  6. 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.
  7. Roger B. Myerson & Robert J. Weber, 1988. "A Theory of Voting Equilibria," Discussion Papers 782, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  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. Antonio Merlo & Daniel Diermeier & Hülya Eraslan, 2004. "Bicameralism and Government Formation," Working Papers 2004.81, Fondazione Eni Enrico Mattei.
  10. Torsten Persson & Guido Tabellini, . "Political Economics and Macroeconomic Policy," Working Papers 121, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  11. 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.
  12. Davide Ticchi & Andrea Vindigni, 2010. "Endogenous Constitutions," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 120(543), pages 1-39, 03.
  13. Alessro Lizzeri & Nicola Persico, . "The Provision of Public Goods Under Alternative Electoral Incentives," Penn CARESS Working Papers b96440ba0bfa06ca550ac40aa, Penn Economics Department.
  14. James M. Poterba & Jürgen von Hagen, 1999. "Fiscal Institutions and Fiscal Performance," NBER Books, National Bureau of Economic Research, Inc, number pote99-1, Ekim.
  15. Alessandro Lizzeri & Nicola Persico, 2005. "A Drawback Of Electoral Competition," Journal of the European Economic Association, MIT Press, MIT Press, vol. 3(6), pages 1318-1348, December.
  16. 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, vol. 58(2), pages 277-97, April.
  17. 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.
  18. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, December.
  19. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
  20. Torsten Persson & Guido Tabellini, 2004. "Constitutions and Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 75-98, Winter.
  21. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314, December.
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