Political Fragmentation and Government Stability: Evidence from Local Governments in Spain

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 probability incumbent is unseated by 5 percentage points. The entry of an stability reducing single-party majority and increasing instability governments when such not available. We interpret our results light bargaining model coalition formation featuring instability. (JEL C78, D72, H70)