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Adjustments in Different Government Systems


  • Enrico Spolaore


This paper develops a model in which agents have a conflict of interest over what instrument to use for policy adjustment in response to shocks. Three different government systems are analyzed: cabinet systems, in which one decision-maker has full control over adjustment policies; consensus systems, in which adjustment policies must be agreed upon by all agents; and checks-and-balances systems, in which one agent decides what instrument should be used for adjustment, but the remaining agents may veto its use. All three systems may lead to inefficient policies. The cabinet system adjusts too often. The other systems may fail to adjust when adjustment is optimal. The relative performance of the three systems depends on the degree of political fragmentation and the size distribution of shocks. Copyright Blackwell Publishing Ltd 2004.

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  • Enrico Spolaore, 2004. "Adjustments in Different Government Systems," Economics and Politics, Wiley Blackwell, vol. 16(2), pages 117-146, July.
  • Handle: RePEc:bla:ecopol:v:16:y:2004:i:2:p:117-146

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    References listed on IDEAS

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    Cited by:

    1. Tao Li, 2014. "Expert advising under checks and balances," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 477-502, February.
    2. Fabian Gunzinger & Jan-Egbert Sturm, 2016. "It's Politics, Stupid! Political Constraints Determined Governments' Reactions to the Great Recession," Kyklos, Wiley Blackwell, vol. 69(4), pages 584-603, November.
    3. Dreher, Axel & Lamla, Michael J. & Lein, Sarah M. & Somogyi, Frank, 2009. "The impact of political leaders' profession and education on reforms," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 169-193, March.
    4. Bortolotti, Bernardo & Cambini, Carlo & Rondi, Laura, 2013. "Reluctant regulation," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 804-828.
    5. Martinelli, Cesar & Escorza, Raul, 2007. "When are stabilizations delayed? Alesina-Drazen revisited," European Economic Review, Elsevier, vol. 51(5), pages 1223-1245, July.
    6. Luca Pareschi & Edoardo Mollona, 2016. "No country for neoliberalism: a topic modeling approach to protean discourses to resist privatizations in Italy," Working Papers 7, Department of Management, Università Ca' Foscari Venezia.
    7. Alberto Alesina & Silvia Ardagna & Francesco Trebbi, 2006. "Who Adjusts and When? On the Political Economy of Reforms," NBER Working Papers 12049, National Bureau of Economic Research, Inc.
    8. Bluhm R & Thomsson K.M., 2015. "Ethnic divisions, political institutions and the duration of declines: A political economy theory of delayed recovery," MERIT Working Papers 003, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Niklas Potrafke, 2006. "Political Effects on the Allocation of Public Expenditures: Empirical Evidence from OECD Countries," Discussion Papers of DIW Berlin 653, DIW Berlin, German Institute for Economic Research.
    10. Carlos Scartascini & Mariano Tommasi & Ernesto Stein, 2010. "Veto Players and Policy Trade-Offs- An Intertemporal Approach to Study the Effects of Political Institutions on Policy," Research Department Publications 4660, Inter-American Development Bank, Research Department.
    11. Marcela Eslava & Oskar Nupia, 2010. "Political Fragmentation and Government Spending: Bringing Ideological Polarization into the Picture," DOCUMENTOS CEDE 006713, UNIVERSIDAD DE LOS ANDES-CEDE.
    12. Heiner Felix Mikosch & Silke Übelmesser, 2007. "Staatsverschuldungsunterschiede im internationalen Vergleich und Schlussfolgerungen für Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(4), pages 309-334, November.
    13. Kentaro Katayama, 2008. "Delay in Fiscal Reform," Microeconomics Working Papers 23075, East Asian Bureau of Economic Research.
    14. Eric Dubois & Matthieu Leprince & Sonia Paty, 2007. "The Effects of Politics on Local Tax Setting: Evidence from France," Urban Studies, Urban Studies Journal Limited, vol. 44(8), pages 1603-1618, July.
    15. repec:ebl:ecbull:eb-17-00816 is not listed on IDEAS
    16. Maria Manuel Pinho, 2004. "Political models of budget deficits: a literature review," FEP Working Papers 138, Universidade do Porto, Faculdade de Economia do Porto.
    17. Maria Manuel Pinho, 2008. "The political economy of public spending composition: evidence from a panel of OECD countries," FEP Working Papers 295, Universidade do Porto, Faculdade de Economia do Porto.
    18. Bluhm, Richard & Thomsson, Kaj, 2015. "Ethnic divisions, political institutions and the duration of declines," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112863, Verein für Socialpolitik / German Economic Association.
    19. Gerard Rpland, 2001. "The Political Economy of Transition," William Davidson Institute Working Papers Series 413, William Davidson Institute at the University of Michigan.
    20. repec:eee:macchp:v2-2599 is not listed on IDEAS
    21. Alessandro Riboni, 2013. "Ideology and endogenous constitutions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(3), pages 885-913, April.
    22. Stefania Fabrizio & Ashoka Mody, 2010. "Breaking The Impediments To Budgetary Reforms: Evidence From Europe," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 362-391, November.
    23. repec:hal:cesptp:hal-00800688 is not listed on IDEAS
    24. Alberto Alesina & Andrea Passalacqua, 2015. "The Political Economy of Government Debt," NBER Working Papers 21821, National Bureau of Economic Research, Inc.
    25. Paulo Júlio, 2011. "Public Debt Stabilization: Redistributive Delays Versus Preemptive Anticipations," GEE Papers 0045, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2011.

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