This paper studies how political fragmentation affects government stability. Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.
Carozzi, Felipe, Davide Cipullo, and Luca Repetto.
"Political Fragmentation and Government Stability: Evidence from Local Governments in Spain."
American Economic Journal: Applied Economics,
Bargaining Theory; Matching Theory
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
State and Local Government; Intergovernmental Relations: General