Choosing the Form of Government: Theory and Evidence from Brazil

Abstract: This paper proposes a model to study the main factors that influence the preferences of different population groups over presidential and parliamentary systems. Our theory suggests that the parliamentary regime leads to a type of fiscal decentralization in the form of more transfers to constituencies. Ceteris paribus, the poor groups of the population tend to prefer the presidential system relatively more than the rich, since the lower quality of their local accountability institutions (e.g. local media and judicial courts) makes them more vulnerable to the expropriation of rents by their legislators. We also show that, in order to perform adequately, the parliamentary regime depends on the existence of a class of politicians that can be trusted to represent well the interests of voters. Our model is able to account for the main stylized facts emerging from the analysis of referendum data from Brazil.