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Political Fragmentation and Government Stability: Evidence from Local Governments in Spain

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  • Felipe Carozzi
  • Davide Cipullo
  • Luca Repetto

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.

Suggested Citation

  • Felipe Carozzi & Davide Cipullo & Luca Repetto, 2022. "Political Fragmentation and Government Stability: Evidence from Local Governments in Spain," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 23-50, April.
    • Handle: RePEc:aea:aejapp:v:14:y:2022:i:2:p:23-50
    DOI: 10.1257/app.20200128
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    1. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
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    Citations

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    Cited by:

    1. Stephan Schneider & Sven Kunze, 2021. "Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism," KOF Working papers 21-491, KOF Swiss Economic Institute, ETH Zurich.
    2. Davide Cipullo, 2023. "When Women Take All: Direct Election and Female Leadership," CESifo Working Paper Series 10229, CESifo.
    3. Davide Cipullo, 2021. "Gender Gaps in Political Careers: Evidence from Competitive Elections," CESifo Working Paper Series 9075, CESifo.
    4. Carozzi, Felipe & Cipullo, Davide & Repetto, Luca, 2024. "Powers that be? Political alignment, government formation, and government stability," Journal of Public Economics, Elsevier, vol. 230(C).
    5. Perugini, Francesco, 2024. "Local government efficiency and economic growth: The Italian case," Socio-Economic Planning Sciences, Elsevier, vol. 91(C).
    6. Cipullo, Davide & Reslow, André, 2022. "Electoral cycles in macroeconomic forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 307-340.
    7. Gabriel, Ricardo Duque & Klein, Mathias & Pessoa, Sofia, 2022. "The Political Costs of Austerity," Working Paper Series 418, Sveriges Riksbank (Central Bank of Sweden).

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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