Political fractionalization and delay in fiscal stabilizations: a duration analysis

Kevin Grier, Shu Lin, Haichun Ye

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

This article employs a duration analysis approach to empirically investigate whether political fractionalization leads to delayed fiscal stabilizations. Using a broad sample of both developed and developing countries for the period 1975–2011, we consistently find strong evidence that political fractionalization is significantly associated with longer delays in stabilizing high deficits. In particular, political fractionalization has a greater impact on delays in periods of macroeconomic distress. We also show that, while the fractionalization of government parties delays fiscal stabilization, the fractionalization of opposition parties tends to facilitate fiscal stabilization.

Original languageEnglish
Pages (from-to)157-175
Number of pages19
JournalPublic Choice
Volume164
Issue number1-2
DOIs
StatePublished - Jul 1 2015

Keywords

  • Duration
  • Fiscal stabilization
  • Hazard
  • Political fractionalization

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