The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Political Institutions, Economic Approaches To

  • Timothy Besley
  • Torsten Persson
Reference work entry


Political institutions affect the rules of the game in which politics is played. Economists now have theoretical approaches to explain the impact of institutions on policy, and empirical evidence to support the relevance of the theory. This article sketches a framework to inform discussions about how political institutions shape policy outcomes. It does so using four examples: majoritarian versus proportional elections; parliamentary versus presidential government; whether to impose term-limits on office holders; and the choice between direct and representative democracy. Each example illustrates how theory and data can be brought together to investigate a specific issue.


Accountability Adverse selection Agency Citizen initiative and referendum Coalition government Corruption Direct democracy Majoritarian elections Moral hazard Parliamentary government Plurality rule Political competition Political institutions, economic approaches to Presidential government Proportional representation Rent seeking Representative democracy Representation Separation of powers Spatial voting models Targeted public spending Term limits Treatment effects 

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We are grateful to Jenny Mansbridge for helpful comments.


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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Timothy Besley
    • 1
  • Torsten Persson
    • 1
  1. 1.