This article argues that consensual political institutions as operationalized by Lijphart and Crepaz (1991) have significantly favorable effects on unemployment, inflation, and the number of working days lost, whereas economic growth remains unaffected. Although this finding is consistent with Olson's theoretical concept of “encompassing organizations,” this study shows that Olson's empirical operationalization is flawed. “Strong,” two-party “Westminster” systems, based on single-member district electoral rules, and single-party, bare majority cabinets do not perform as well as “weak,” multiparty coalition governments with proportional representation as an electoral rule. An empirical measure of “encompassing organizations” is introduced, termed popular cabinet support. A cross-sectional/time-series panel study of 162 elections (18 countries and 9 elections per country, N = 162) provides strong evidence that governments with consensual, inclusive, and accommodative constitutional structures and wider popular cabinet support behave more “responsibly” than do their more majoritarian, exclusionary, and adversarial counterparts.
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