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It's a matter of confidence: Institutions, government stability and economic outcomes

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  • Luca Bettarelli
  • Michela Cella
  • Giovanna Iannantuoni
  • Elena Manzoni

Abstract

The effect of constitutional structures (such as the effect of a presidential vs. a parliamentary system) over policy outcomes has been widely studied in the economic literature. In this paper, we investigate whether stable parliamentary systems and unstable parliamentary systems behave differently in terms of the policy outcomes they implement. We show that accounting for the stability of parliamentary systems generates results that are more robust compared to the previous literature. More precisely, we find that stable parliamentary systems are significantly different both from presidential and from unstable parliamentary ones. Moreover, we show that this result is robust to changes in the set of countries, and to changes in the definition of stability. Finally, we discuss how these results are consistent with the presence of a selection effect in parliamentary systems.

Suggested Citation

  • Luca Bettarelli & Michela Cella & Giovanna Iannantuoni & Elena Manzoni, 2015. "It's a matter of confidence: Institutions, government stability and economic outcomes," Working Papers 309, University of Milano-Bicocca, Department of Economics, revised Sep 2015.
    • Handle: RePEc:mib:wpaper:309
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    Cited by:

    1. Michela Cella & Giovanna Iannantuoni & Elena Manzoni, 2017. "Do the Right Thing: Incentives for Policy Selection in Presidential and Parliamentary Systems," Economica, London School of Economics and Political Science, vol. 84(335), pages 430-453, July.

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    More about this item

    Keywords

    presidential system; parliamentary system; confidence requirement; government stability;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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