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Bicameralism and Government Formation, Second Version

  • Daniel Diermeier

    ()

    (MEDS,Kellogg School of Management, Northwestern University)

  • Hulya Eraslan

    ()

    (Finance Department, Wharton School, University of Pennsylvania)

  • Antonio Merlo

    ()

    (Department of Economics, University of Pennsylvania)

In this paper we present a structural approach to the study of government formation in multi-party parliamentary democracies. The approach is based on the estimation of a stochastic bargaining model which we use to investigate the effects of specific institutional features of parliamentary democracy on the formation and stability of coalition governments. We then apply our methodology to estimate the effects of governmental bicameralism. Our main findings are that eliminating bicameralism does not affect government durability, but does have a significant effect on the composition of governments leading to smaller coalitions. These results are due to an equilibrium replacement effect: removing bicameralism affects the relative durability of coalitions of different sizes which in turn induces changes in the coalitions that are chosen in equilibrium.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/07-010.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 07-010.

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Length: 45 pages
Date of creation: 01 May 2002
Date of revision: 01 Feb 2007
Handle: RePEc:pen:papers:07-010
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  1. Merlo, Antonio, 1997. "Bargaining over Governments in a Stochastic Environment," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 101-31, February.
  2. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
  3. Daniel Diermeier & Antonio Merlo, 1998. "Government Turnover in Parliamentary Democracies," Discussion Papers 1232, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
  5. Cindy Skach, 2005. "Constitutional Origins of Dictatorship and Democracy," Constitutional Political Economy, Springer, vol. 16(4), pages 347-368, December.
  6. David P. Baron & Daniel Diermeier, 2001. "Elections, Governments, And Parliaments In Proportional Representation Systems," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 933-967, August.
  7. Diermeier, Daniel & Merlo, Antonio, 2004. "An empirical investigation of coalitional bargaining procedures," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 783-797, March.
  8. Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-99, March.
  9. Antonio Merlo & Charles Wilson, 1997. "Efficient delays in a stochastic model of bargaining," Economic Theory, Springer, vol. 11(1), pages 39-55.
  10. Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, number 9780199548477, March.
  11. Antonio Merlo, 1998. "Economic Dynamics And Government Stability In Postwar Italy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 629-637, November.
  12. Roger B. Myerson & Daniel Diermeier, 1999. "Bicameralism and Its Consequences for the Internal Organization of Legislatures," American Economic Review, American Economic Association, vol. 89(5), pages 1182-1196, December.
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