Economic Consequences of Constitutions: A Theory and Survey

Abstract

One of the major questions in economics is what causes the growth of wealth. What explains that some countries experience higher economic growth than others and hence, ultimately, that some countries are rich, while others are poor? The idea here is to explore the link between political institutions, on the one hand, where the constitution is at the center of our interest, and economic performance, on the other. Is it the case that certain sets of institutions are more conducive to economic growth and sound fiscal affairs than others by influencing the way political decision-makers act? If so, which are these institutions? The present paper presents both a theoretical analysis of these issues, as well as the results from a number of real-world studies.

Keywords: constitutions, institutions, growth

JEL Classification: O43