Government fragmentation and fiscal deficits: a regression discontinuity approach Articles
Overview
published in
- PUBLIC CHOICE Journal
publication date
- April 2018
start page
- 367
end page
- 391
issue
- 3-4
volume
- 175
Digital Object Identifier (DOI)
full text
International Standard Serial Number (ISSN)
- 0048-5829
Electronic International Standard Serial Number (EISSN)
- 1573-7101
abstract
-
Some electoral systems favor strong single-party majority governments, while
others the formation of coalitions. Having one or the other is likely to affect economic outcomes
in ways that are unintended when the electoral rules are approved. In this paper, we
show that government fragmentation has large fiscal implications. We also provide results
that have a causal interpretation. Using a panel of Spanish municipalities, along with a
close-elections regression discontinuity design, we find that single-party majorities run
budgets with a 1.5% point larger primary surplus than that of coalitions. In addition, we
show that lower deficits are driven mainly by single-party majority governments" capacity
to raise more revenues. These findings are robust to several model specifications.
Classification
subjects
- Economics
- Politics
keywords
- fiscal deficit; single-party majority government; coalitions; regression discontinuity