PIERCARLO BONETTI FEBRUARY 7 TH 2013

 Federalism (fiscal federalism, the institution of federalism).  Bicameralism (bicameral and multicameral diversity).  Qualified majorities (core and winset of qualified majorities, pervasiveness).  Bicameralism and qualified majorities combined.  Conclusions

Analysis of bicameralism + Analysis of qualified majorities = Federal countries have more veto players than unitary countries FEDERAL COUNTRIES HAVE HIGHER POLICY STABILITY THAN UNITARY ONES

 Two level of government rules the same land and people.  Each level is autonomous in at least one area of jurisdiction.  The autonomy of each government in its sphere has to be guaranteed.

 Hayen and Tiebout: federalism is generally seen as a positive feature for economy and finance within the country (local consumers have better information and make better choices).  Weingast (1995) says that in order to make federalism a good model for economy, it has to be MARKET PRESERVING FEDERALISM.

 Market governments have primary regulatory responsibility over the economy.  Existence of a common market in order to forbid local governments to erect trade barriers.  Hard budget constraints for local governments so they cannot print money…

 India, Argentina and Brazil are federal countries but they don’t use market preserving federalism. low economic performance.  USA was a market preserving federalism until 1930s.  Contemporary China has a market preserving federalism but is not federal.

 Market preserving federalism is a theory which is not applied in practice in federal countries  We know if federalism would be applied in that way in terms of attention to the economy we could infer positive outcomes. Treisman (2000) made a study with data among 154 countries and proved that countries with an high level of decentralization have an high level of corruption.

 Riker’s definition  Representation regard to the population  Representation regardless to the population of each “state”.  Independent judiciary.  Party fragmentation.  Bicameralism.  Qualified majorities.

 The two chambers are different in terms of rules.  The two chambers are different in terms of composition (elected by different constituencies and also because of party composition within the chamber).

the discussion between the chambers is reduced to the line connecting the 2 yolks of the chambers. when the distance between the yolks beco- mes larger, the possibili- ty of change decreases.

 The outcomes will be closer to the chamber that is the agenda setter.  It happens in some countries that bills shuttles from one chamber to the other (navette system). the chambers want to reach an agreement and in order to do so they’re willing to make some concessions. (sometimes there is a conference committee in charge to find the agreement)

When the chambers make the offers they choose the point closest to them from the winset of the SQ. Depending on the rounds of negotiation, both the chambers will converge to the center in order to avoid rejections.

 To have a small SQ winset, in a bicameral system, the SQ has to be close to one particular line.  Under qualified majority rule, if the SQ is located centrally within the collective veto player, its winset will be small or empty (high policy stability).  Differences: 1. Qualified majorities leave centrally located policies unchanged. 2. Bicameralism has more random outcomes.

The graph shows the 5/7 majority core. When the qualified majority threshold increases the winset of the SQ shrinks and so do policy stability.

Tsebelis says “per se” qualified majority systems are difficult to find, while qualified majority equivalents are more frequent:  Non-constitutional requirements: the filibuster of the Senate in the US modifies the rule of the simple majority. When a filibuster occurs it is required a 3/5 (40 senators) majority. It is necessary an agreement of the minority party to override the filibuster, and so Tsebelis says the US Senate is a qualified majority institution.

 Absolute majorities and abstensions: in France, Germany and EU work with absolute majorities. 1. if all the members are present and nobody abstains, absolute majority=simple majority 2. When someone abstains or is absent, then it is equivalent to have a qualified majority requirement of the member who participate to the vote.

 Unwilling or undesirable allies and simple majorities: (especially in the past) there exist “anti-system” parties which are not taken into account by the majority party (the communist party in France 4 th Republic), or they refuse to support the government. they transform simple majority requirements into qualified majorities. Ex: oversized government in parliamentary systems are qualified majority equivalents.

when qualified majorities are the decision-making rules, policy stability should increase, and outcomes are expected to be centrally located towards the centre of the location of VPs.

 Bicameralism.  1 st chamber decides by simple majority.  2 nd chamber decides by qualified majority. Policy stability increases  Examples: USA, EU..

Policy stability increases since the winset of the SQ shrinks. The outcomes are closer to the less flexible chamber (U decides by unanimity).

 Tsebelis says in his analysis it is fundamental to make generalizations in order to make a theory consistent.  If we take the example of the US where 3 players are altogether it doesn’t make any sense to make a single dimension analysis.  VPs theory holds in any number of dimensions and regardless of whether the VPs are individual or collective.

Federalism bicameralism Policy stability Multiple VPs Independent judiciary Independent bureaucracies Government instability Qualified majorities