The size and composition of government spending in multi-party systems

This paper explores the structure of party competition across democratic nations and its impact on the size and composition of government spending. The analytical framework expands on the norm of universalism, applies it to multi-party legislatures, and develops several propositions. We examine these propositions empirically using panel data for two samples, OECD countries and a large sample of world countries. The findings for both samples indicate that political fragmentation, usually measured by the number of effective political parties, has a positive relationship with the size of the government, and with subsidies and transfers. The findings also indicate that proportional representation (particularly closed lists proportional voting systems) and parliamentary countries favor higher public expenditures.