The Size of Government in Majoritarian and Consensus Democracies

Abstract

This article looks at the effect of democratic institutions on the size of government. With the help of the ordinary least squares regression analysis of data from the Organization for Economic Cooperation and Development (OECD) countries from 1974 to 1995, the study provides considerable evidence that the variance in the type of democracy, measured by the Lijphart index of majoritarian/consensus political institutions, has a systematic effect on the variance in the size of government, measured both by total government outlays as well as total government revenue as a percentage of gross domestic product. The article further argues that such institutional effects on the size of government are strengthened by partisan politics. More specifically, the analysis demonstrates the presence of the multiplicative interaction effect of the mutually reinforcing nature between the institutional structure and partisan composition of government in their association with the size of government.