Fragmented Legislatures and the Budget: Analyzing Presidential Democracies

Abstract

What impact does party fragmentation have on the likelihood of democracies to run a fiscal deficit? Past research is almost unanimous in finding that as the number of parties in a country's legislature or government grows, so does its probability of overspending. However, this finding is based largely on parliamentary systems, and there is no reason to believe that it should hold when executives are independent. In this article, I develop a theory for the impact of legislative fragmentation on budgetary politics in presidential democracies. I argue that unified presidential systems should tend most toward fiscal solvency but that increasing fragmentation should actually facilitate budget balancing when government is divided. The logic is that presidents, who are likely to prefer balanced budgets due to their broad constituencies, will be better able to craft acceptable governing coalitions from divided legislatures than from ones controlled by a single opposing party. They will also be better able to circumvent such fragmented legislatures should a coalition prove impossible. I test these propositions quantitatively in all presidential democracies from 1976 to 2007. The results provide support for the theory and highlight the contrasting impact of legislative fragmentation on public policy in presidential vs. parliamentary systems.