The Economic Growth Effect of Constitutions Revisited Presentation for Political Economics Reading Group 20/ Carl Henrik Knutsen

Problem questions and main results  Does form of government (presidentialism vs parliamentarism) affect growth in GDP per capita?  Does electoral system (plural-majoritarian vs proportional representation) affect growth in GDP per capita?  Main empirical results:  Form of government does not seem to have any systematic effect  PR (and semi-PR) systems affect growth positively when compared to plural-majoritarian

Structure paper  Introduction  Theoretical survey form of government and growth  Including earlier empirical results  Theoretical survey electoral rules and growth  Including earlier empirical results  Data and empirical analysis  OLS with PCSE, RE, FE  Matching  2SLS  Conclusion

Motivation  Real world importance: Constitutional engineering and re- engineering.  Historically, much debate on political consequences  Some examples  US constitution, Federalist Papers, fear of tyranny and power concentration  Presidentialism in Latin America, political gridlock and breakdown  The Weimar Republic, PR and the triumph of Hitler  Norway, minority governments, “chaos” and the need for plurality rules?  Economic consequences?  Not well understood (historically)  Lack of good models, but also: multiple mechanisms and aggregation  Person and Tabellini’s research program

Presidentialism, parliamentarism and growth  Checks and balances, more veto players under presidentialism  (+) reduces opportunity for predatory behavior (e.g. expropriation)  (?) Reduces size of the public sector  (-) rigidity and lack of reform  (-) special interests and side payments to veto players  Other arguments in favor of parliamentarism  Party discipline, party strength and coordination under parliamentarism; the vote of confidence.  Personification of politics under presidentialism  Earlier studies:  +parliamentarism: Gerring et al (2009), Persson (2005)  +parl.: (in low quality democracies only) P&T (2003)  +pres.: P&T (2006)

Electoral systems and growth  Plurality rules and accountability (relation seats and votes, fewer coallition governments, smaller districts, individual candidate voting)  PR and autonomy of politicians from narrow interest groups (pork barrel, protectionism, property rights protection)  PR and stability/credibility of policy (changes in seats and alternation of government, coallition governments)  Earlier empirical studies: P&T (2003 and 2006), Persson effect from PR on trade liberalization, property rights and good economic institutions, but effect on growth not robust

Data  Dep. variable: GDP per capita growth from Maddison (2006)  Form of govt and electoral rules from Schjølset (2008)  Controls: Federalism, log GDP pc, log population, log regime duration, degree of democracy, ethnic fractionalization, colonizer, region, plurality religion, fraction English and other major European language speakers, latitude, Frankel-Romer trade instrument, decade dummies  Time frame:

Empirical analysis  Main result: 1% (+) extra GDP per capita growth from PR, no effect from form of government. Significant effect from PR (and semi-PR), except for 2SLS.  OLS with PCSE  Robustness checks, countries  Presidentialism and negative effect in temporally constrained sample  RE and FE, constitutional inertia and inference  Matching  2SLS (large standard errors, point estimates, hausman tests)

Conclusion  No effect from form of government  The “gentler, milder form of democracy” related to PR rules is not only better for representation of diverse groups in politics and congruence between government and median voter, but also for economic growth.