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:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1737

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.