Political Fragmentation and Government Stability. Evidence from Local Governments in Spain Felipe Carozzi1 London School of Economics Davide Cipullo2 Uppsala University Luca Repetto3 Uppsala University Abstract This paper studies how political fragmentation affects government stability. Using a regression-discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not feasible. We interpret our results in light of a bargaining model of coalition formation featuring government instability. Keywords: Government Stability; Fragmentation; No-confidence votes; Bargaining. JEL classification: H1, H7, R50 First Version: February 2019 Final Version: March 2021 1Department of Geography and the Environment. London School of Economics. Houghton Street. London WC2A 2AE. Email:
[email protected]. 2Department of Economics, Uppsala University, SE-751 20 Uppsala, Sweden. Email: da-
[email protected]. 3Department of Economics, Uppsala University, SE-751 20 Uppsala, Sweden. Email:
[email protected]. This paper previously circulated as "Divided they fall: Fragmented Parliaments and Government Stabil- ity". We would like to thank the editor Ilyana Kuziemko, two referees, Alberto Alesina, Inés Berniell, Germán Bidegain, Jan Bietenbeck, Michael