INTRODUCTION

Partisan cycles in economic policy and institutional balancing are not a uniquely American phenomenon. On the contrary, the ideas developed in this volume with specific reference to the United States have a much broader appeal, and illuminate the political economy of other democracies. In different institutional settings political and economic variables interconnect in different ways, but this chapter argues that the concepts of polarization, balancing, and partisan cycles can explain important aspects of the political economy of parliamentary democracies.

First of all, long periods of divided government are hardly an American monopoly. On the contrary, in parliamentary democracies cases of unified government are rare. Laver and Shepsle (1990) appropriately define a government to be unified “whenever a single party both forms the political executive and commands a majority in the legislature”. In the period 1945–82 fewer than 15 percent of the governments of parliamentary democracies satisfied this definition. All the other governments were not unified: at least two parties were needed to participate either in the government or in the parliamentary majority supporting the government. Therefore, if one views coalition government as an example of division of power, divided government is the norm rather than the exception. Based upon this observation, Fiorina (1991) argues that Downs (1957) overplays the contrast between the American two party system and European coalition governments: divided government in America and coalition governments in Europe have much more in common than it would appear at first sight.

In addition, coalition government is not the only possible form of power sharing: an additional one is the balancing of different levels of government.