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Political Institutions and Policy Outcomes: What are the Stylized Facts?

Torsten Persson
Stockholm University - Institute for International Economic Studies (IIES); London School of Economics & Political Science (LSE); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Guido Tabellini
University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER); Centre for Economic Policy Research (CEPR); Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

April 2001

CESifo Working Paper Series No. 459

Abstract:
We investigate the effect of electoral rules and political regimes on fiscal policy outcomes in a panel of 61 democracies from 1960 and onwards. In presidential regimes, the size of government is smaller and less responsive to income shocks, compared to parliamentary regimes. Under majoritarian elections, social transfers are smaller and aggregate spending less responsive to income shocks than under proportional elections. Institutions also shape electoral cycles: only in presidential regimes is fiscal adjustment delayed until after the elections, and only in proportional and parliamentary systems do social transfers expand around elections. Several of these empirical regularities are in line with recent theoretical work; others are still awaiting a theoretical explanation.

JEL Classifications: H0

Working Paper Series

Date posted: June 03, 2001 ; Last revised: March 18, 2008

Suggested Citation

Persson, Torsten and Tabellini, Guido, Political Institutions and Policy Outcomes: What are the Stylized Facts? (April 2001). CESifo Working Paper Series No. 459. Available at SSRN: http://ssrn.com/abstract=270935

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Contact Information

Guido Tabellini (Contact Author) University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) ( email ) Via Salasco 5 20136 Milan Italy +39 02 5836 3305 (Phone) +39 02 5836 3302 (Fax)
Centre for Economic Policy Research (CEPR) 90-98 Goswell Road London EC1V 7RR United Kingdom
Center for Economic Studies and Ifo Institute for Economic Research (CESifo) Poschinger Str. 5 DE-81679 Munich Germany HOME PAGE: http://www.CESifo.de
Torsten Persson Stockholm University - Institute for International Economic Studies (IIES) ( email ) Stockholm University 10691 Stockholm SE-10691 Sweden +46 8 163066 (Phone) +46 8 164177 (Fax)
London School of Economics & Political Science (LSE) Houghton Street London WC2A 2AE United Kingdom
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
Centre for Economic Policy Research (CEPR) 90-98 Goswell Road London EC1V 7RR United Kingdom