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The choice between a proportional representation (PR) or plurality-based electoral system is commonly assumed to involve a trade-off. The former is assumed to provide fairer representation but at a cost in terms of stability and effectiveness. Recent work by Lijphart and others suggests that not only are PR-based (consensus) systems more democratic than plurality-based (majoritarian) systems but they are also more effective in terms of macroeconomic performance. This article offers a critical reexamination of these claims. The author provides empirical evidence that the superior performance of consensus democracy on two important macroeconomic indicators-inflation and unemployment-is driven largely by corporatism and central bank independence. After controlling for these, the results indicate that the core elements of consensus democracy are associated with higher rates of both inflation and unemployment. Whereas corporatism and independent central banks are claimed as elements of a broader concept of consensus democracy, the author argues that neither can be comfortably accommodated within the consensus framework depicted by Lijphart.

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Scholars are divided on the merits of ethnofederalism as an institutional approach to the management of ethnically divided societies. For some, ethnofederalism is a potentially workable compromise between the demands for independence of territorially concentrated ethnic groups and the desire of a common state to preserve its territorial integrity; for critics, it is a short-cut to secession and ultimate state collapse. The argument of critics is theoretically plausible, but an examination of the universe of post-1945 states with ethnofederal arrangements, both failures and successes, shows that ethnofederalism has succeeded more often than it has failed. Within this universe of cases, moreover, ethnofederalism has demonstrably outperformed institutional alternatives, and where ethnofederal systems have failed, they have failed where no institutional alternatives could plausibly have succeeded. The increasing enthusiasm among policymakers and practitioners for prescribing federal solutions to ethnic problems is both understandable and defensible in light of these findings.

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