How is Government Stability Affected by the State of the Economy? Payoff Structures, Government Type and Economic State

Abstract

To what extent are incumbent governments affected by the state of the economy when it comes to premature dissolution? This article investigates this research question using a data set on parties and governments for 18 West European countries for the period 1945–2013. In addition to investigating the general effect of the state of the economy on government termination, we hypothesize that macroeconomic conditions affect cabinet termination in different ways depending on the type of government that is in power. Using Cox proportional hazards models to estimate how different government types are impacted by the same changes in the economy, our results indicate that economic changes do matter, but that they mainly affect coalition governments. Our results also indicate that there is a difference between minority and majority governments when it comes to the type of termination. Minority coalition governments resolve to early elections, not replacements, presumably because a minority government does not survive defection. Majority coalition governments, in contrast, show sensitivity towards both types of terminations.

Does Party-System Fragmentation Affect the Quality of Democracy?

“…The empirical literature has confirmed some of these worries. For example, several studies have found that coalitions make governments more unstable and legislatures more short-lived (Best 2013; Grotz and Weber 2012; Hellström and Walther 2019; Somer-Topcu and Williams 2008; Taylor and Herman 1971; Warwick 1979). Party-system fragmentation has also been found to correlate with more corruption (Chang and Golden 2007).…”

“…The lack of consensus on whether party-system fragmentation is beneficial or detrimental for democracy extends to studies looking at more specific indicators of democratic quality. A vast literature has looked at whether the number of parties affects governmental stability (Best 2013; Grotz and Weber 2012; Hellström and Walther 2019; Somer-Topcu and Williams 2008; Taylor and Herman 1971; Warwick 1979), accountability (Hobolt, Tilley, and Banducci 2013; Powell and Whitten 1993; Whitten and Palmer 1999), corruption (Chang and Golden 2007; Rose-Ackerman 1978; Schleiter and Voznaya 2014; Schleiter and Voznaya 2014), turnout (Banducci and Karp 2009; Boulding and Brown 2013; Couture, Breux, and Bherer 2014; Crepaz 1990; Franklin and de Miño 1998; Geys and Heyndels 2006; Henderson and McEwen 2010; Hoffman-Martinot, Rallings, and Thrasher 1996; Jackman 1987; Jackman and Milner 1995; Lehoucq and Wall 2004; Radcliff and Davis 2000), public goods provision (Chhibber and Nooruddin 2004; Sáez and Sinha 2010; Teitelbaum and Thachil 2010; Thachil and Teitelbaum 2015; Weitz-Shapiro 2012), female representation (Lijphart 2012; Norris and Inglehart 2001; Tremblay 2007), and the representation of minorities (Lijphart 2012; Wilkinson 2006). Some authors argue that a higher number of parties will positively impact the quality of democracy, while others claim the opposite.…”

Coalition Politics in Central Eastern Europe

“…In this field, contemporary studies mainly focus on how different political institutions (e.g., Bergmann et al 2022; Schleiter and Evans 2022), pre-electoral coalitions (e.g., Chiru 2015), support party arrangements (e.g., Krauss and Thürk 2021) affect the longevity of cabinet (their duration). There is also literature that focuses on the strategic timing of early elections (e.g., Schleiter and Tavits 2016; Hellström and Walther 2019). This literature shows that the timing of extra elections is not only the result of when the cabinet faces parliamentary defeat, but at times it can also be a matter of strategic choice by the cabinet or the PM.…”

“…This is telling as our country experts do not identify any so-called opportunistic early elections or strategic election calling. That is, instances when governments try to seize the opportunity to call for early elections strategically, for instance, during times of relatively strong economic performance, or when they are faring well at the opinion polls (see, for example, Kayser 2005;Hellström and Walther 2019).…”

Government Stability in the Remittance-Economic Growth Link in Ghana

“…Various studies have generated interesting results on the relationship between government stability and economic growth. Hellström and Walther (2019) posited that the stability of a government may be affected by the performance of an economy, especially when the government is a minority government. Using a Cox proportional hazards model on a sample of 18 West European countries from 1945-2013, they concluded that economic changes do matter for government terminations, among other findings.…”