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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 784828000000000024.

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Date of creation: 23 Apr 2005
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Handle: RePEc:cla:levarc:784828000000000024

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  1. Diermeier, Daniel & Eraslan, H�lya & Merlo, Antonio, 2007. "Bicameralism and Government Formation," International Quarterly Journal of Political Science, now publishers, now publishers, vol. 2(3), pages 227-252, August.
  2. Ticchi, Davide & Vindigni, Andrea, 2003. "Endogenous Constitutions," Seminar Papers, Stockholm University, Institute for International Economic Studies 726, Stockholm University, Institute for International Economic Studies.
  3. Torsten Persson & Gerard Roland & Guido Tabellini, . "Comparative Politics and Public Finance," Working Papers 114, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. 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.
  5. Torsten Persson & Guido Tabellini & Francesco Trebbi, . "Electoral Rules and Corruption," Working Papers 182, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  6. Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1388, C.E.P.R. Discussion Papers.
  7. 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.
  8. Torsten Persson & Gerard Roland & Guido Tabellini, 2003. "How Do Electoral Rules Shape Party Structures, Government Coalitions and Economic Policies?," Working Papers 251, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  9. Persson, T. & Tabellini, G., 1997. "Political Economics and Macroeconomic Policy," Papers, Stockholm - International Economic Studies 630, Stockholm - International Economic Studies.
  10. 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.
  11. Roger B. Myerson & Robert J. Weber, 1988. "A Theory of Voting Equilibria," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 782, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. 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.
  13. Timothy Besley & Stephen Coate, 2003. "Elected Versus Appointed Regulators: Theory and Evidence," Journal of the European Economic Association, MIT Press, MIT Press, vol. 1(5), pages 1176-1206, 09.
  14. Torsten Persson & Guido Tabellini, 2004. "Constitutions and Economic Policy," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 18(1), pages 75-98, Winter.
  15. Diermeier, Daniel & Merlo, Antonio, 2000. "Government Turnover in Parliamentary Democracies," Journal of Economic Theory, Elsevier, Elsevier, vol. 94(1), pages 46-79, September.
  16. Alessandro Lizzeri & Nicola Persico, . ""The Provision of Public Goods Under Alternative Electoral Incentives''," CARESS Working Papres, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences 98-08, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  17. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262661314, December.
  18. 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.
  19. 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.
  20. James M. Poterba & Jürgen von Hagen, 1999. "Fiscal Institutions and Fiscal Performance," NBER Books, National Bureau of Economic Research, Inc, number pote99-1, July.
  21. 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.
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