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“Do government formation deadlocks damage economic growth? Evidence from history’s longest period of political deadlock”

Author

Listed:
  • Daniel Albalate

    (Department of Econometrics, Statistics and Applied Economics & GiMIREA University of Barcelona. C/ John Keynes 1-11, 08034 Barcelona. Tel: 34.93.4031131)

  • Germà Bel

    (Department of Econometrics, Statistics and Applied Economics & GiM-IREA University of Barcelona. C/ John Keynes 1-11, 08034 Barcelona. Tel: 34.93.4031131 Fax:34.93.4024573)

Abstract

Several countries have experienced lengthy periods of political deadlock in recent years, as they have sought to form a new government. This study examines whether government formation deadlocks damagea country’s economy. To do so, we analyze the case of Belgium, which took a record 541 days to create a post-election government, following the June 2010 federal elections. Employing the synthetic control method, our results show that the Belgian economy did not suffer an economic toll; on the contrary, GDP per capita growth was higher than would have otherwise been expected. As such, our evidence contradicts frequent claims that long periods of government formation deadlock negatively affect an economy.

Suggested Citation

  • Daniel Albalate & Germà Bel, 2018. "“Do government formation deadlocks damage economic growth? Evidence from history’s longest period of political deadlock”," IREA Working Papers 201817, University of Barcelona, Research Institute of Applied Economics, revised Jul 2018.
    • Handle: RePEc:ira:wpaper:201817
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    References listed on IDEAS

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    More about this item

    Keywords

    Government; Political economy; Synthetic Control Method; Belgium. JEL classification:D72; E02; E65; H1; O43; P48; P52.;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H1 - Public Economics - - Structure and Scope of Government
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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