Scandinavian Working Papers in Economics

Seminar Papers,
Stockholm University, Institute for International Economic Studies

No 658: The size and scope of government: Comparative politics with rational politicians

Torsten Persson () and Guido Tabellini ()
Additional contact information
Torsten Persson: Institute for International Economic Studies, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden
Guido Tabellini: Bocconi University

Abstract: We try to demonstrate how economists may engage in research on comparative politics, relating the size and composition of government spending to the political system. A Downsian model of electoral competition and forward-looking voting indicates that majoritarian - as opposed to proportional - elections increase competition between parties by focusing it into some key marginal districts. This leads to less public goods, less rents for politicians, more redistribution and larger government. A model of legislative bargaining and backward-looking voting indicates that presidential - as opposed to parliamentary - regimes increase competition between both politicians and voters. This leads to less public goods, less rents for politicians, less redistribution and smaller government. We confront these predictions with cross-country data from around 1990, controlling for economic and social determinants of government spending. We find strong and robust support for the prediction that the size of government is smaller under presidential regimes, and weaker support for the prediction that majoritarian election are associated with less public goods.

Keywords: Political economics; Electoral rules; Political regimes; Public finance; Rents; Redistribution

JEL-codes: D72; E60; H11; H40

53 pages, October 5, 1998

Note: Published in: European Economic Review 43, 1999, 699-735

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