The name is absent

1. Introduction

Recent empirical research by economists has demonstrated that electoral rules
exert a strong influence on fiscal policy: majoritarian elections are associated with
smaller government spending, smaller budget deficits and smaller welfare states,
compared to proportional elections. Details of electoral rules seem to matter for
corruption and effectiveness in government service provision, better performance
being associated with larger electoral districts, and with individual rather than
party-list ballots.¹

For many years, political scientists have stressed the strong influence of elec-
toral rules on the party structure: majoritarian elections are more likely to lead
to a two-party system, while proportional elections often produce fragmentation
of political parties. Moreover, these implications for party structure naturally
spill over to the formation of governments: single-party majority governments
are more common when parties are few, and coalition (or single-party minority)
governments are the norm when parties are many.²

It is a plausible conjecture that these correlations in the data reflect a common
causal chain. Proportional elections raise the number of parties in the legisla-
ture. This raises the incidence of coalition governments, and thereby increases
the likelihood of higher government spending, because policymaking under such
governments is plagued by the so-called common-pool problem.

Despite its plausibility, this conjecture has not really been carefully studied,
neither theoretically nor empirically. One reason may be that the suggested causal
chain is quite complex. Rather than studying the entire chain, researchers have
thus focused on only one or two of its links. Another reason for the lack of encom-
passing research may be that the issues fall in the cracks between two disciplines.
Political scientists have studied the political consequences of alternative electoral
rules and neglected their economic repercussions whereas economists have focused
on their economic effects in simplified political settings where party structures and
types of government are exogenous or play no significant role.³ The goal of this

¹ See, in particular, Milesi-Ferretti, Perotti and Rostagno, 2002, Persson and Tabellini 2003,
2004 and Persson, Tabellini and Trebbi, 2003.

² See, for instance, Laver and Schofield, 1990, Lijphart, 1984, 1994, 1999, Powell, 1982, 2000,
and Taagepera and Shugart, 1989.

³ Thus Cox (1990, 1997) focused on the link between electoral rules and the number of candi-
dates or parties while neglecting government formation and policy; Austen-Smith (2000) studies
taxation and government formation under alternative electoral rules, but takes party structures
as exogenous; Baron and Diermeier (2001) study government formation and policymaking under

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