Our political economy model has correctly forecasted the 1998 and 2005 elections. However, in 2002 we predicted a tight race to the benefit of the Christian Democrats(CDU)/Christian Socialists(CSU)-Free Democratic Party (FDP) opposition, so underestimating the narrow defeat of the FDP by the Green Party. In the German political system, proportional representation makes single-party domination almost impossible. On the contrary, the big parties, Social Democratic Party (SPD) or CDU/CSU, are pushed to build a majority coalition. In this competition, the FDP has been the “pivotal party” in German political life, at least until 2002. Since then, the Greens have challenged the FDP, with the Ecologists allowing the SPD to form a red-green coalition in 1998 and in 2002. Similarly, in 2005 the FDP was not associated with the grand coalition driven by Angela Merkel.

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