Electoral rules and goverment spending in parliamentary democracies

by

Torsten Persson, Gérard Roland and Guido Tabellini

Abstract

We present a theoretical model of a parliamentary democracy where electoral competition inside coalition governments induces higher spending than under single party governments. Policy preferences of parties are endogenous and derived from opportunistic reelection motives. The electoral rule affects government spending, but only indirectly: proportional elections induce a more fragmented party system and a larger incidence of coalition governments than do majoritarian elections. Empirical evidence from post-war parliamentary democracies strongly supports these predictions.

JEL classifications: H00, D72, D78.

Keywords: electoral rules, party systems, coalition governments, fiscal policy, electoral accountability.