Parliamentary Dynamics and Fiscal Policy.

In parliamentary demacracies, fiscal policies may be threatened by the unexpected termination of government tenure or by strong budget procedures. Our model implies that electoral rule and the type of the budgetary process help explain some of the striking differences observed in public finance and government stability in post-war democratic countries. We provide new evidence for 17 OECD countries during post-war period: in multi-party governments, economic variables that create redistributive effects are harmful for government tenures while economic growth and weak budgetary procedures are beneficial for government tenures.