DP1737 Comparative Politics and Public Finance

Author(s): Torsten Persson , Gérard Roland , Guido Tabellini

Publication Date: November 1997

Keyword(s): comparative politics , electoral accountability , legislative cohesion , political economics , Public Finance , Separation of Powers

JEL(s): D72 , D78 , H00

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP1737.asp

This paper presents a model of electoral accountability to compare the public finance outcomes under a presidential-congressional and a parliamentary system. In a presidential-congressional system, contrary to a parliamentary system, there are no endogenous incentives for legislative cohesion, but this allows for a clearer separation of powers. These features lead to clear differences in the public finance performance of the two systems. A parliamentary system has redistribution towards a majority, less underprovision of public goods, more waste and a higher burden of taxation, whereas a presidential-congressional system has redistribution towards a minority, more underprovision of public goods, but less waste and a smaller size of government.