Presidentialism, Parliamentarism and Fiscal Policy: Evidence from the Local Level in Germany | E-Axes
 

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Presidentialism, Parliamentarism and Fiscal Policy: Evidence from the Local Level in Germany

Abstract

This paper proposes and tests a novel explanation for di fferences in fiscal policies between presidential and parliamentary democracies. In contrast to standard explanations based on rent-seeking politicians, I argue that executive-legislative institutions matter for taxes and transfers because they shape who gets what in partisan conflict over redistribution. The partisan model developed in the paper highlights that executive-legislative institutions influences public spending by shaping the distribution and e ffectiveness of partisan governments. Accordingly, spending is lower in presidential than in parliamentary democracies because the separation of executive and legislative power under presidentialism reduces the frequency and bargaining power of left governments. I test implications of this logic using a global data set. Consistent with the partisan argument, the estimates show that government partisanship accounts for a signifi cant portion of the cross-sectional variation in public spending and that the fi scal e ffects of changes in government ship are less pronounced under presidentialism.

To download the PDF version of the working paper click here.


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