Skip to main content Accessibility help

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

  • David Weisstanner (a1)


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.



Hide All
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.
Aldrich, J. H. (2011) Why Parties? A Second Look. Chicago, IL: University of Chicago Press.
Alesina, A. and Drazen, A. (1991) Why are Stabilizations Delayed? The American Economic Review 81: 11701188.
Alesina, A. and Perotti, R. (1995) The Political Economy of Budget Deficits. Staff Papers (International Monetary Fund) 42: 131.
Alexiadou, D. (2013) In Search of Successful Reform: The Politics of Opposition and Consensus in OECD Parliamentary Democracies. West European Politics 36: 704725.
Allians för Sverige (2006) Fler i arbete – mer att dela på. Valmanifest 2006, (accessed 7 January 2016).
Alliansen (2010) Jobbmanifestet. Valmanifest 2010–2014, (accessed 7 January 2016).
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.
Armingeon, K. and Baccaro, L. (2012) Political Economy of the Sovereign Debt Crisis: The Limits of Internal Devaluation. Industrial Law Journal 41: 254275.
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.
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.
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.
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.
Bäck, H. and Dumont, P. (2007) Combining Large-n and Small-n Strategies: The Way Forward in Coalition Research. West European Politics 30: 467501.
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.
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.
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.
Beck, N. and Katz, J. N. (1996) Nuisance Vs. Substance: Specifying and Estimating Time-Series-Cross-Section Models. Political Analysis 6: 136.
Beck, N. and Katz, J. N. (2011) Modeling Dynamics in Time-Series–Cross-Section Political Economy Data. Annual Review of Political Science 14: 331352.
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.
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.
Bojar, A. (2015) Intra-Governmental Bargaining and Political Budget Cycles in the European Union. European Union Politics 16: 90115.
Bundeskanzleramt (2008) Regierungsprogramm 2008–2013: Gemeinsam für Österreich, (accessed 7 January 2016).
Cusack, T. R. (1999) Partisan Politics and Fiscal Policy. Comparative Political Studies 32: 464486.
De Boef, S. and Keele, L. (2008) Taking Time Seriously. American Journal of Political Science 52: 184200.
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.
Edin, P.-A. and Ohlsson, H. (1991) Political Determinants of Budget Deficits: Coalition Effects Versus Minority Effects. European Economic Review 35: 15971603.
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.
Franzese, R. J. Jr. (2002) Macroeconomic Policies of Developed Democracies. Cambridge: Cambridge University Press.
Grilli, V., Masciandaro, D. and Tabellini, G. (1991) Political and Monetary Institutions and Public Financial Policies in the Industrial Countries. Economic Policy 6: 342392.
Hallerberg, M., Strauch, R. R. and von Hagen, J. (2009) Fiscal Governance in Europe . New York: Cambridge University Press.
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.
Hübscher, E. (2015) The Politics of Fiscal Consolidation Revisited. Journal of Public Policy. First published online 9 February 2015. doi: 10.1017/S0143814X15000057.
Irish Government (1994) A Government of Renewal – A Strategy for Renewal. Irish Times, 15 December, p. 6.
Jacobs, A. M. (2011) Governing for the Long Term: Democracy and the Politics of Investment. New York: Cambridge University Press.
Katzenstein, P. J. (1985) Small States in World Markets. Industrial Policy in Europe. Ithaca, NY and London: Cornell University Press.
Keele, L. and Kelly, N. J. (2006) Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables. Political Analysis 14: 186205.
König, P. D. and Wenzelburger, G. (2014) Toward a Theory of Political Strategy in Policy Analysis. Politics & Policy 42: 400430.
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.
Kydland, F. E. and Prescott, E. C. (1977) Rules Rather than Discretion: The Inconsistency of Optimal Plans. Journal of Political Economy 85: 473491.
Lijphart, A. (2012) Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries, 2nd ed. New Haven, CT and London: Yale University Press.
Linz, J. J. (1998) Democracy’s Time Constraints. International Political Science Review 19: 1937.
Luebbert, G. M. (1984) A Theory of Government Formation. Comparative Political Studies 17: 229264.
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.
Majone, G. (1996) Temporal Consistency and Policy Credibility: Why Democracies Need Non-Majoritarian Institutions. European University Institute Working Paper No. 96/57.
Martin, L. W. and Stevenson, R. T. (2001) Government Formation in Parliamentary Democracies. American Journal of Political Science 45: 3350.
Martin, L. W. and Stevenson, R. T. (2010) The Conditional Impact of Incumbency on Government Formation. The American Political Science Review 104: 503518.
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.
Nordhaus, W. D. (1975) The Political Business Cycle. The Review of Economic Studies 42: 169190.
Obinger, H., Schmitt, C. and Zohlnhöfer, R. (2014) Partisan Politics and Privatization in OECD Countries. Comparative Political Studies 47: 12941323.
Persson, T., Roland, G. and Tabellini, G. (2007) Electoral Rules and Government Spending in Parliamentary Democracies. Quarterly Journal of Political Science 2: 155188.
Persson, T. and Tabellini, G. (2009) Democratic Capital: The Nexus of Political and Economic Change. American Economic Journal: Macroeconomics 1: 88126.
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.
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.
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.
Reinhart, C. M. and Rogoff, K. S. (2009) This Time is Different. Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press.
Roubini, N. and Sachs, J. D. (1989) Political and Economic Determinants of Budget Deficits in the Industrial Democracies. European Economic Review 33: 903933.
Sakamoto, T. (2001) Effects of Government Characteristics on Fiscal Deficits in 18 OECD Countries, 1961-1994. Comparative Political Studies 34: 527554.
Schmid, J. (1990) Die CDU: Organisationsstrukturen, Politiken und Funktionsweisen einer Partei im Föderalismus. Opladen: Leske + Budrich.
Tavits, M. (2008) The Role of Parties’ Past Behavior in Coalition Formation. The American Political Science Review 102: 495507.
Tsebelis, G. (2002) Veto Players. How Political Institutions Work. Princeton, NJ: Princeton University Press.
von Hagen, J. and Harden, I. J. (1995) Budget processes and commitment to fiscal discipline. European Economic Review 39: 771779.
Warwick, P. V. (1996) Coalition Government Membership in West European Parliamentary Democracies. British Journal of Political Science 26: 471499.
Weaver, R. K. (1986) The Politics of Blame Avoidance. Journal of Public Policy 6: 371398.
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.


Related content

Powered by UNSILO
Type Description Title
Supplementary materials

Weisstanner supplementary material
Online Appendix

 Word (156 KB)
156 KB

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

  • David Weisstanner (a1)


Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed.