Who does better for the economy? Presidents versus parliamentary democracies

Are certain forms of government associated with superior macroeconomic performance? This paper attempts to answer this question by examining how government systems impact upon macroeconomic outcomes. We find that presidential regimes consistently produce less favourable outcomes as compared with parliamentary ones with lower output growth, higher and more volatile in ation and greater income inequality. Moreover, the magnitude of this effect is sizable. For example, output growth is between 0.6 and 1.2 percentage points lower and inflation is six percentage point higher under presidential regimes relative to those under parliamentary ones. The difference in distributional outcomes is even more stark; income inequality is between sixteen to twenty per cent worse under presidential systems. We also find that presidential regimes are particularly harmful in: less established democracies; where there is lack of inclusive institutions; where the rule of law is not fully respected; and, where the presidents have extensive legislative powers, especially in the presence of electoral systems with proportional representation.