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

Author

Listed:
  • Bettareli, Luca
  • Cella, Michela
  • Iannantuoni, Giovanna
  • Manzoni, Elena

Abstract

In this paper, we analyse the effect of constitutional structures on policy outcomes. In particular, we exploit heterogeneity in parliamentary systems deriving from the presence and the use of the confidence vote to investigate whether stable and unstable parliamentary systems behave differently in terms of the policy they implement. This finer partition of parliamentary systems allows us to identify effects that are more robust than those in the literature. We show that the difference between presidential and parliamentary systems documented in previous works is driven by a difference between presidential and stable parliamentary systems. We suggest that possible transmission channels are legislative cohesion and (the absence of) selection.

Suggested Citation

  • Bettareli, Luca & Cella, Michela & Iannantuoni, Giovanna & Manzoni, Elena, 2017. "It's a matter of confidence: Institutions, government stability and economic outcomes," MPRA Paper 77546, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:77546
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    File URL: https://mpra.ub.uni-muenchen.de/77546/1/MPRA_paper_77546.pdf
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    References listed on IDEAS

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    1. Hayo, Bernd & Voigt, Stefan, 2013. "Endogenous constitutions: Politics and politicians matter, economic outcomes don’t," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 47-61.
    2. Torsten Persson, 2002. "Do Political Institutions Shape Economic Policy?," Econometrica, Econometric Society, vol. 70(3), pages 883-905, May.
    3. Rockey, James, 2012. "Reconsidering the fiscal effects of constitutions," European Journal of Political Economy, Elsevier, vol. 28(3), pages 313-323.
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    5. Daniel Diermeier & Razvan Vlaicu, 2011. "Executive Control and Legislative Success," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 846-871.
    6. Lorenz Blume & Jens Müller & Stefan Voigt & Carsten Wolf, 2009. "The economic effects of constitutions: replicating—and extending—Persson and Tabellini," Public Choice, Springer, vol. 139(1), pages 197-225, April.
    7. Voigt, Stefan, 2011. "Empirical constitutional economics: Onward and upward?," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 319-330.
    8. Daron Acemoglu, 2005. "Constitutions, Politics and Economics: A Review Essay on Persson and Tabellini's "The Economic Effect of Constitutions"," NBER Working Papers 11235, National Bureau of Economic Research, Inc.
    9. Michela Cella & Giovanna Iannantuoni & Elena Manzoni, 2015. "Do The Right Thing. A comparison of politicians' incentives across constitutional systems," Working Papers 290, University of Milano-Bicocca, Department of Economics, revised Jan 2015.
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    11. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
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    13. Martin Ardanaz & Carlos Scartascini, 2014. "The economic effects of constitutions: do budget institutions make forms of government more alike?," Constitutional Political Economy, Springer, vol. 25(3), pages 301-329, September.
    14. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
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    16. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
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    1. repec:bla:econom:v:84:y:2017:i:335:p:430-453 is not listed on IDEAS

    More about this item

    Keywords

    presidential system; parliamentary system; confidence vote; government stability;

    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
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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