This paper studies how political fragmentation affects government stability. Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.
Carozzi, F., Cipullo, D., Repetto, L., Political Fragmentation and Government Stability: Evidence from Local Governments in Spain, <<AMERICAN ECONOMIC JOURNAL. APPLIED ECONOMICS>>, 2022; 14 (2): 23-50. [doi:10.1257/app.20200128] [http://hdl.handle.net/10807/208803]
Political Fragmentation and Government Stability: Evidence from Local Governments in Spain
Cipullo, Davide;
2021
Abstract
This paper studies how political fragmentation affects government stability. Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.
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