Hostname: page-component-7d8f8d645b-2q4x6 Total loading time: 0 Render date: 2023-05-29T06:43:16.256Z Has data issue: false Feature Flags: { "useRatesEcommerce": true } hasContentIssue false

The fiscal benefits of repeated cooperation: coalitions and debt dynamics in 36 democracies

Published online by Cambridge University Press:  31 March 2016

David Weisstanner*
Institute of Political Science, University of Bern, Switzerland E-mail:


Do coalition governments really suffer from short time horizons in fiscal policymaking, as posited by standard political-economy models? This article focusses on coalitions that have created high levels of familiarity through shared governing experiences in the past and that are likely to cooperate again in future governing coalitions. I argue that such coalitions have incentives to internalise the future costs of debt accumulation and reach credible agreements to balance their constituencies’ fiscal preferences. Moreover, sustaining broad coalitions should have electoral advantages to implementing controversial economic reforms, thus resulting in lower debt increases compared not only with less durable coalitions but also with single-party governments. Comparing 36 economically advanced democracies between (up to) 1962 and 2013, I estimate the effects of coalitions’ cooperation prospects on the dynamics of public debt. The findings indicate that long time horizons can help coalitions to overcome intertemporal coordination problems and to reach specific policy goals.

Research Article
© Cambridge University Press, 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)


Abbas, S. M. A., Belhocine, N., ElGanainy, A. A. and Horton, M. A. (2010) A Historical Public Debt Database. IMF Working Paper No. 10/245.Google Scholar
Aldrich, J. H. (2011) Why Parties? A Second Look. Chicago, IL: University of Chicago Press.CrossRefGoogle Scholar
Alesina, A. and Drazen, A. (1991) Why are Stabilizations Delayed? The American Economic Review 81: 11701188.Google Scholar
Alesina, A. and Perotti, R. (1995) The Political Economy of Budget Deficits. Staff Papers (International Monetary Fund) 42: 131.CrossRefGoogle Scholar
Alexiadou, D. (2013) In Search of Successful Reform: The Politics of Opposition and Consensus in OECD Parliamentary Democracies. West European Politics 36: 704725.CrossRefGoogle Scholar
Allians för Sverige (2006) Fler i arbete – mer att dela på. Valmanifest 2006, (accessed 7 January 2016).Google Scholar
Alliansen (2010) Jobbmanifestet. Valmanifest 2010–2014, (accessed 7 January 2016).Google Scholar
Alt, J., Dreyer Lassen, D. and Wehner, J. (2012) Moral Hazard in an Economic Union: Politics, Economics, and Fiscal Gimmickry in Europe. LSE Political Science and Political Economy Working Paper No. 5/2012.Google Scholar
Armingeon, K. and Baccaro, L. (2012) Political Economy of the Sovereign Debt Crisis: The Limits of Internal Devaluation. Industrial Law Journal 41: 254275.CrossRefGoogle Scholar
Armingeon, K., Guthmann, K. and Weisstanner, D. (2014) Politische Voraussetzungen von Austeritätspolitik: Ein internationaler Vergleich von 17 etablierten Demokratien zwischen 1978 und 2009. Zeitschrift für Staats- und Europawissenschaften 12: 242271.CrossRefGoogle Scholar
Armingeon, K., Guthmann, K. and Weisstanner, D. (2015a) Choosing the Path of Austerity: How Parties and Policy Coalitions Influence Welfare State Retrenchment in Periods of Fiscal Consolidation. West European Politics. Advance online publication. doi: 10.1080/01402382.2015.1111072.Google Scholar
Armingeon, K., Isler, C., Knöpfel, L. and Weisstanner, D. (2015b) Supplement to the Comparative Political Data Set – Government Composition 1960–2013. Bern: Institute of Political Science, University of Berne.Google Scholar
Armingeon, K., Isler, C., Knöpfel, L., Weisstanner, D. and Engler, S. (2015c) Comparative Political Data Set 1960–2013. Bern: Institute of Political Science, University of Berne.Google Scholar
Bäck, H. and Dumont, P. (2007) Combining Large-n and Small-n Strategies: The Way Forward in Coalition Research. West European Politics 30: 467501.CrossRefGoogle Scholar
Bäck, H. and Lindvall, J. (2015) Commitment Problems in Coalitions: A New Look at the Fiscal Policies of Multiparty Governments. Political Science Research and Methods 3: 5372.CrossRefGoogle Scholar
Bawn, K. and Rosenbluth, F. (2006) Short Versus Long Coalitions: Electoral Accountability and the Size of the Public Sector. American Journal of Political Science 50: 251265.CrossRefGoogle Scholar
Beck, N. and Katz, J. N. (1995) What to Do (and Not to Do) With Time-Series Cross-Section Data. American Political Science Review 89: 634647.CrossRefGoogle Scholar
Beck, N. and Katz, J. N. (1996) Nuisance Vs. Substance: Specifying and Estimating Time-Series-Cross-Section Models. Political Analysis 6: 136.CrossRefGoogle Scholar
Beck, N. and Katz, J. N. (2011) Modeling Dynamics in Time-Series–Cross-Section Political Economy Data. Annual Review of Political Science 14: 331352.CrossRefGoogle Scholar
Bejar, S., Mukherjee, B. and Moore, W. H. (2011) Time Horizons Matter: The Hazard Rate of Coalition Governments and the Size of Government. Economics of Governance 12: 201235.CrossRefGoogle Scholar
Boix, C. (1997) Privatizing the Public Business Sector in the Eighties: Economic Performance, Partisan Responses and Divided Governments. British Journal of Political Science 27: 473496.CrossRefGoogle Scholar
Bojar, A. (2015) Intra-Governmental Bargaining and Political Budget Cycles in the European Union. European Union Politics 16: 90115.CrossRefGoogle Scholar
Bundeskanzleramt (2008) Regierungsprogramm 2008–2013: Gemeinsam für Österreich, (accessed 7 January 2016).Google Scholar
Cusack, T. R. (1999) Partisan Politics and Fiscal Policy. Comparative Political Studies 32: 464486.CrossRefGoogle Scholar
De Boef, S. and Keele, L. (2008) Taking Time Seriously. American Journal of Political Science 52: 184200.CrossRefGoogle Scholar
de Haan, J. and Sturm, J.-E. (1997) Political and Economic Determinants of OECD Budget Deficits and Government Expenditures: A Reinvestigation. European Journal of Political Economy 13: 739750.CrossRefGoogle Scholar
Edin, P.-A. and Ohlsson, H. (1991) Political Determinants of Budget Deficits: Coalition Effects Versus Minority Effects. European Economic Review 35: 15971603.CrossRefGoogle Scholar
Franklin, M. N. and Mackie, T. T. (1983) Familiarity and Inertia in the Formation of Governing Coalitions in Parliamentary Democracies. British Journal of Political Science 13: 275298.CrossRefGoogle Scholar
Franzese, R. J. Jr. (2002) Macroeconomic Policies of Developed Democracies. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Grilli, V., Masciandaro, D. and Tabellini, G. (1991) Political and Monetary Institutions and Public Financial Policies in the Industrial Countries. Economic Policy 6: 342392.CrossRefGoogle Scholar
Hallerberg, M., Strauch, R. R. and von Hagen, J. (2009) Fiscal Governance in Europe . New York: Cambridge University Press.CrossRefGoogle Scholar
Hallerberg, M. and von Hagen, J. (1999) Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union. In Poterba J. M. and von Hagen J. (eds.), Fiscal Institutions and Fiscal Performance. Chicago, IL: University of Chicago Press, 209232.Google Scholar
Hübscher, E. (2015) The Politics of Fiscal Consolidation Revisited. Journal of Public Policy. First published online 9 February 2015. doi: 10.1017/S0143814X15000057.Google Scholar
Irish Government (1994) A Government of Renewal – A Strategy for Renewal. Irish Times, 15 December, p. 6.Google Scholar
Jacobs, A. M. (2011) Governing for the Long Term: Democracy and the Politics of Investment. New York: Cambridge University Press.CrossRefGoogle Scholar
Katzenstein, P. J. (1985) Small States in World Markets. Industrial Policy in Europe. Ithaca, NY and London: Cornell University Press.Google Scholar
Keele, L. and Kelly, N. J. (2006) Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables. Political Analysis 14: 186205.CrossRefGoogle Scholar
König, P. D. and Wenzelburger, G. (2014) Toward a Theory of Political Strategy in Policy Analysis. Politics & Policy 42: 400430.CrossRefGoogle Scholar
Kreps, D. M. (1990) Corporate Culture and Economic Theory. In Alt J. E. and Shepsle K. A. (eds.), Perspectives on Positive Political Economy. Cambridge: Cambridge University Press, 90143.CrossRefGoogle Scholar
Kydland, F. E. and Prescott, E. C. (1977) Rules Rather than Discretion: The Inconsistency of Optimal Plans. Journal of Political Economy 85: 473491.CrossRefGoogle Scholar
Lijphart, A. (2012) Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries, 2nd ed. New Haven, CT and London: Yale University Press.Google Scholar
Linz, J. J. (1998) Democracy’s Time Constraints. International Political Science Review 19: 1937.CrossRefGoogle Scholar
Luebbert, G. M. (1984) A Theory of Government Formation. Comparative Political Studies 17: 229264.CrossRefGoogle Scholar
Lupia, A. and Strøm, K. (2008) Bargaining, Transaction Costs, and Coalition Governance. In Strøm K., Müller W. C. and Bergmann T. (eds.), Cabinets and Coalition Bargaining. The Democratic Life Cycle in Western Europe. Oxford: Oxford University Press, 5183.Google Scholar
Majone, G. (1996) Temporal Consistency and Policy Credibility: Why Democracies Need Non-Majoritarian Institutions. European University Institute Working Paper No. 96/57.Google Scholar
Martin, L. W. and Stevenson, R. T. (2001) Government Formation in Parliamentary Democracies. American Journal of Political Science 45: 3350.CrossRefGoogle Scholar
Martin, L. W. and Stevenson, R. T. (2010) The Conditional Impact of Incumbency on Government Formation. The American Political Science Review 104: 503518.CrossRefGoogle Scholar
Müller, W. C. and Strøm, K. (eds.) (1999) Policy, Office, or Votes? How Political Parties in Western Europe Make Hard Decisions. Cambridge: Cambridge University Press.CrossRefGoogle ScholarPubMed
Nordhaus, W. D. (1975) The Political Business Cycle. The Review of Economic Studies 42: 169190.CrossRefGoogle Scholar
Obinger, H., Schmitt, C. and Zohlnhöfer, R. (2014) Partisan Politics and Privatization in OECD Countries. Comparative Political Studies 47: 12941323.CrossRefGoogle Scholar
Persson, T., Roland, G. and Tabellini, G. (2007) Electoral Rules and Government Spending in Parliamentary Democracies. Quarterly Journal of Political Science 2: 155188.CrossRefGoogle Scholar
Persson, T. and Tabellini, G. (2009) Democratic Capital: The Nexus of Political and Economic Change. American Economic Journal: Macroeconomics 1: 88126.Google Scholar
Plümper, T., Troeger, V. E. and Manow, P. (2005) Panel Data Analysis in Comparative Politics: Linking Method to Theory. European Journal of Political Research 44: 327354.CrossRefGoogle Scholar
Powell, E. N. and Tucker, J. A. (2014) Revisiting Electoral Volatility in Post-Communist Countries: New Data, New Results and New Approaches. British Journal of Political Science 44: 123147.CrossRefGoogle Scholar
Powell, G. B. Jr. and Whitten, G. D. (1993) A Cross-National Analysis of Economic Voting: Taking Account of the Political Context. American Journal of Political Science 37: 391414.CrossRefGoogle Scholar
Reinhart, C. M. and Rogoff, K. S. (2009) This Time is Different. Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press.Google Scholar
Roubini, N. and Sachs, J. D. (1989) Political and Economic Determinants of Budget Deficits in the Industrial Democracies. European Economic Review 33: 903933.CrossRefGoogle Scholar
Sakamoto, T. (2001) Effects of Government Characteristics on Fiscal Deficits in 18 OECD Countries, 1961-1994. Comparative Political Studies 34: 527554.CrossRefGoogle Scholar
Schmid, J. (1990) Die CDU: Organisationsstrukturen, Politiken und Funktionsweisen einer Partei im Föderalismus. Opladen: Leske + Budrich.CrossRefGoogle Scholar
Tavits, M. (2008) The Role of Parties’ Past Behavior in Coalition Formation. The American Political Science Review 102: 495507.CrossRefGoogle Scholar
Tsebelis, G. (2002) Veto Players. How Political Institutions Work. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
von Hagen, J. and Harden, I. J. (1995) Budget processes and commitment to fiscal discipline. European Economic Review 39: 771779.CrossRefGoogle Scholar
Warwick, P. V. (1996) Coalition Government Membership in West European Parliamentary Democracies. British Journal of Political Science 26: 471499.CrossRefGoogle Scholar
Weaver, R. K. (1986) The Politics of Blame Avoidance. Journal of Public Policy 6: 371398.CrossRefGoogle Scholar
Weingast, B. R., Shepsle, K. A. and Johnsen, C. (1981) The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics. Journal of Political Economy 89: 642664.CrossRefGoogle Scholar
Supplementary material: File

Weisstanner supplementary material

Online Appendix

Download Weisstanner supplementary material(File)
File 156 KB