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Hey Big Spender: Don’t Blame Minority Governments

Summary:
Similar trends emerge in public expenditure and debt ratios regardless of whether minority or majority governments are in power, according to a new study by the ifo Center for Public Finance and Political Economy. Critics of minority governments often express the fear that they are politically instable and expensive for taxpayers; citing the compromises that such governments have to make with opposition parties to gain a parliamentary majority. Ifo Center Director Niklas Potrafke disagrees: “Several minority governments seem to be good at winning over the right partners for parliamentary decision papers and avoiding expensive compromises.” Ifo’s research is based on new OECD data for 32 countries for the period from 2009 to

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Similar trends emerge in public expenditure and debt ratios regardless of whether minority or majority governments are in power, according to a new study by the ifo Center for Public Finance and Political Economy. Critics of minority governments often express the fear that they are politically instable and expensive for taxpayers; citing the compromises that such governments have to make with opposition parties to gain a parliamentary majority.

Ifo Center Director Niklas Potrafke disagrees: “Several minority governments seem to be good at winning over the right partners for parliamentary decision papers and avoiding expensive compromises.”

Ifo’s research is based on new OECD data for 32 countries for the period from 2009 to 2016. During this period minority governments were in power in 13 of the countries analysed. The results of ifo’s latest research fall into line with the findings of several studies from the 1990s, which examine earlier periods and also fail to find any major differences in the fiscal policy of minority and majority governments.

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

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