Essays on the Political Economy of Government Fragmentation

Programa de Doctorat en Economia This PhD thesis presents empirical evidence about the effects of political fragmentation on some of the main political challenges society has faced to date in the 21st century. For governments to behave in their citizens’ best interests, they need to take responsibility for the actions they implement and offer satisfactory reasons for the policies they adopt. Therefore, it is crucial to guarantee that political fragmentation does not undermine their accountability. Specifically, this thesis has first analysed the effect of government fragmentation on political corruption by determining whether fragmented governments (non-majority) are more likely to find themselves embroiled in corruption scandals. Second, this thesis has examined the effect of political fragmentation (entry of one additional party in the legislature) on the implementation of fiscal consolidation. Finally, continuing with the study of fiscal consolidation, this thesis has analysed clarity of responsibility and the electoral effects of the implementation of fiscal adjustments in a multi-level governance setting. The second chapter of this thesis has examined the relation between government fragmentation and political corruption in the period 1999-2007. A matching procedure restricts the sample to majorities and non-majorities that are otherwise identical in a set of political variables. After matching, these municipalities are also similar in terms of a broad set of socio-economic traits that might correlate with corruption. In short, the only difference between the municipalities being compared is the government type (majority vs. non-majority). The results indicate that, in close elections (+/– 1 seat), the presence of a fragmented government is not associated with a higher probability of corruption. This outcome sheds light on the political and media debate in 2014 when the national government specifically sought to promote the formation of majority governments to avoid corruption. Moreover, the analysis carried out in the second chapter actually detects that some fragmented governments are less likely to be corrupt than majority governments. Indeed, non-majority governments supported by a pivotal party – that is, parties able to enter into agreements with either ideological bloc – are less corrupt. This result is consistent with a narrative according to which coalition partners are more willing to denounce political corruption when they have other option