Political fragmentation and government stability: evidence from local governments in Spain

Carozzi, Felipe ORCID: 0000-0002-0458-5531, Cipullo, Davide and Repetto, Luca (2022) Political fragmentation and government stability: evidence from local governments in Spain. American Economic Journal: Applied Economics, 14 (2). 23 - 50. ISSN 1945-7782

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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.

Item Type:	Article
Official URL:	https://www.aeaweb.org/journals/app
Additional Information:	© 2022 American Economic Association
Divisions:	Geography and Environment
Subjects:	J Political Science > JN Political institutions (Europe) J Political Science > JS Local government Municipal government
JEL classification:	C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory; Matching Theory D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H70 - General
Date Deposited:	02 Mar 2021 15:27
Last Modified:	04 Nov 2025 18:03
URI:	http://eprints.lse.ac.uk/id/eprint/108934

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