Comparative Dynamics of Parliamentary Governments

This paper presents a dynamic theory of parliamentary governments that incorporates attributes of the institutional system in a country, exogenous events that shape parliamentary and electoral opportunities, and the strategies of the government and the opposition as structured by institutions and preferences. The dynamics are investigated in an infinitely-repeated game in which in each period an event in the form of a shock to income or government resources occurs and the government responds with a legislative proposal that is subject to a confidence or censure procedure and may lead to government continuation, reorganization, or dissolution. This provides a comparative theory of parliamentary governments where the comparison is across procedures for government termination. With a majority confidence procedure, governments are stable, and if parties are politically patient, voting cohesion within the government is high. When parties are politically impatient, cohesion is lower since a government party may have an incentive to pursue opportunities with the out party. A censure or no confidence motion initiated by the opposition can result in voluntary dissolution of government, and the approach of required elections increases the likelihood of dissolution. If the events represent fluctuations in aggregate income, government dissolution occurs in good times but not in bad times. This corresponds to the opportunistic calling of an early election. The theory also predicts that the governments formed are minimal winning coalitions and hence include the smallest party.