Government Strength, Power Dispersion in Governments and Budget Deficits in OECD-Countries. A Voting Power Approach

We test for the influenceof government strength and dispersion ofpower among the parties of coalitiongovernments on the size of annual debtaccumulation through budget deficits inOECD-countries from 1970 to 1999.Government strength and power dispersion incoalition governments are measured by theBanzhaf index of voting power, respectivelythe standard deviation of Banzhaf indicesof coalition parties. We believe that theseare better-suited proxies than most of whathas been applied so far. Governmentstrength turns out to be insignificant.However, coalitions with equally strongpartners run significantly higher deficitsthan coalitions with one dominating party.