Adjustments in Different Government Systems

30 Pages Posted: 8 Jul 2004

See all articles by Enrico Spolaore

Enrico Spolaore

Tufts University - Department of Economics

Abstract

This paper develops a model in which agents have a conflict of interest over what instrument to use for policy adjustment in response to shocks. Three different government systems are analyzed: cabinet systems, in which one decision-maker has full control over adjustment policies; consensus systems, in which adjustment policies must be agreed upon by all agents; and checks-and-balances systems, in which one agent decides what instrument should be used for adjustment, but the remaining agents may veto its use. All three systems may lead to inefficient policies. The cabinet system adjusts too often. The other systems may fail to adjust when adjustment is optimal. The relative performance of the three systems depends on the degree of political fragmentation and the size distribution of shocks.

Suggested Citation

Spolaore, Enrico, Adjustments in Different Government Systems. Economics & Politics, Vol. 16, No. 2, pp. 117-146, July 2004. Available at SSRN: https://ssrn.com/abstract=558829

Enrico Spolaore (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
15
Abstract Views
1,051
PlumX Metrics