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Are democratic governments more efficient?

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  • Adam, Antonis
  • Delis, Manthos D.
  • Kammas, Pantelis

Abstract

This paper explores the relationship between public sector efficiency (PSE) and the level of democracy, both theoretically and empirically. At the theoretical level a simple model of elections with two time periods is presented, which takes into account whether the political regime is democratic or not. Specifically, we assume that elected officials in democracies are "more" accountable to voters than the respective ones in autocracies. This mechanism induces the democratic politicians to produce the public good in a more efficient way, in order to remain in power. In the empirical section we examine the effect of democracy on PSE for a panel dataset of 50 developing and developed countries over the period 1980-2000. Our results suggest that the relationship between PSE and democracy is positive and statistically significant, thus confirming our theoretical priors.

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  • Adam, Antonis & Delis, Manthos D. & Kammas, Pantelis, 2011. "Are democratic governments more efficient?," European Journal of Political Economy, Elsevier, vol. 27(1), pages 75-86, March.
    • Handle: RePEc:eee:poleco:v:27:y:2011:i:1:p:75-86
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    6. Berlemann, Michael & Hielscher, Kai, 2011. "A Time-varying Indicator of Effective Monetary Policy Conservatism," Working Paper 112/2011, Helmut Schmidt University, Hamburg.
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    9. Niklas Potrafke, 2012. "Islam and democracy," Public Choice, Springer, vol. 151(1), pages 185-192, April.
    10. Ana Carolina Garriga, 2016. "Central Bank Independence in the World: A New Data Set," International Interactions, Taylor & Francis Journals, vol. 42(5), pages 849-868, October.
    11. Cooray, Arusha & Potrafke, Niklas, 2011. "Gender inequality in education: Political institutions or culture and religion?," European Journal of Political Economy, Elsevier, vol. 27(2), pages 268-280, June.
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    15. Yang, Suyeon & Park, Sangchan, 2020. "The effects of renewable energy financial incentive policy and democratic governance on renewable energy aid effectiveness," Energy Policy, Elsevier, vol. 145(C).
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    18. Florian Dorn, 2021. "Elections and Government Efficiency," ifo Working Paper Series 363, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    19. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2011. "On the origin of domestic and international terrorism," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 17-36.
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    22. Dorsch, Michael T. & Maarek, Paul, 2015. "Inefficient predation and political transitions," European Journal of Political Economy, Elsevier, vol. 37(C), pages 37-48.
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    Keywords

    Democracy Public sector efficiency;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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