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Presidentialism, Electoral Identifiability, and Budget Balances in Democratic Systems

Published online by Cambridge University Press:  25 August 2006

JOSÉ ANTONIO CHEIBUB
JOSÉ ANTONIO CHEIBUB
Affiliation:
University of Illinois at Urbana-Champaign
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Abstract

This paper examines the impact of the form of government—presidential or parliamentary—on fiscal outcomes in democratic systems. Based on data for democracies in 98 countries between 1970 and 2002, it shows that the gross domestic product ratio of the central government budget balance is higher in presidential than in parliamentary democracies. It also shows that this impact is not due to the fact that presidential systems are not subject to the “costs of coalition” that allegedly afflict parliamentary democracies: the coalition and status of the government are of no consequence for budget balances in either presidential or parliamentary systems. Presidential systems matter for budget balances because they generate relatively high incentives for governments to keep budgets under control. They do so because in presidential systems, unlike in parliamentary systems, voters are by design able to identify and punish those responsible for economic policies. Presidents, however, vary in their capacity to affect budget policies. This paper demonstrates that presidential systems in which presidents are constitutionally able to dominate the budget process or to effectively veto legislation tend to have higher budget balances than those in which the budget process is dominated by the legislature or the president is unable to exercise existing veto powers.

Type
ARTICLES
Information
American Political Science Review , Volume 100 , Issue 3 , August 2006 , pp. 353 - 368
Copyright
© 2006 by the American Political Science Association

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