Journal Article

Political Fragmentation, Fiscal Deficits and Political Institutionalisation

McMenamin, Iain, Elgie, Robert

2008

Overview

One line of research finds the size of the deficit to be positively correlated with the number of political actors. This 'political fragmentation' hypothesis has been tested on OECD countries. We successfully replicate Volkerink and de Haan's (Public Choice 109: 221–242, 2001) model on an OECD sample. However, when we add ten non-OECD countries, the effect of political fragmentation disappears. We argue that the importance of political fragmentation varies according to the institutionalization of political systems. When we interact the age of a democracy with political fragmentation, we find that legislative fractional isation increases the budget deficit as a democracy becomes more institutionalised.

• Publisher: Springer,Springer US,Springer Nature B.V
• Subject: Budget deficit / Budget deficits / Budget surplus / Budget surpluses / Budgets / Coalition governments / Comparative analysis / Datasets / Deficit financing / Deficits / Democracy / Democratization / Developing countries / Economic development / Economic policy / Economics / Economics and Finance / Federal budget deficit / Fractionlaization / GDP / Government / Government spending / Gross Domestic Product / Hypotheses / Institutionalization / Parliamentary system / Political actors / Political behavior / Political Institutions / Political parties / Political Science / Political systems / Politics / Public choice / Public Debt / Public Finance / Public goods / Segmentation