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Political fragmentation and government stability: evidence from local governments in Spain

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  • Carozzi, Felipe
  • Cipullo, Davide
  • Repetto, Luca

Abstract

This paper studies how political fragmentation affects government stability. Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.

Suggested Citation

  • Carozzi, Felipe & Cipullo, Davide & Repetto, Luca, 2022. "Political fragmentation and government stability: evidence from local governments in Spain," LSE Research Online Documents on Economics 108934, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:108934
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    References listed on IDEAS

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    8. Bordo, Michael D. & Duca, John V. & Koch, Christoffer, 2016. "Economic policy uncertainty and the credit channel: Aggregate and bank level U.S. evidence over several decades," Journal of Financial Stability, Elsevier, vol. 26(C), pages 90-106.
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    Cited by:

    1. Cipullo, Davide & Reslow, André, 2022. "Electoral cycles in macroeconomic forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 307-340.
    2. Gabriel, Ricardo Duque & Klein, Mathias & Pessoa, Sofia, 2022. "The Political Costs of Austerity," Working Paper Series 418, Sveriges Riksbank (Central Bank of Sweden).
    3. Carozzi, Felipe & Cipullo, Davide & Repetto, Luca, 2024. "Powers that be? Political alignment, government formation, and government stability," Journal of Public Economics, Elsevier, vol. 230(C).
    4. Stephan Schneider & Sven Kunze, 2021. "Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism," KOF Working papers 21-491, KOF Swiss Economic Institute, ETH Zurich.
    5. Davide Cipullo, 2023. "When Women Take All: Direct Election and Female Leadership," CESifo Working Paper Series 10229, CESifo.
    6. Davide Cipullo, 2021. "Gender Gaps in Political Careers: Evidence from Competitive Elections," CESifo Working Paper Series 9075, CESifo.

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    More about this item

    Keywords

    government; stability; fragmentation; no-confidence votes; bargaining;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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