Affiliation:
1. Department of Geography and the Environment, London School of Economics (email: )
2. Department of Economics, Uppsala University (email: )
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. (JEL C78, D72, H70)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
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