Constitutional Economics (Okonomische Theorie Der Verfassung)

Abstract

In this paper the approach of Constitutional Economics is presented and some of its applications are shown. First, the concept of the original position (constitutional convention) with its informational restrictions and the unanimity rule are discussed. Next, the exchange paradigm which lies behind the whole approach and the role of the self-interest assumption are discussed. Then it is asked for the value judgments which have to be accepted whenever this approach is to be applied to problems of real constitutions. Finally, we show applications of this approach to problems of public debt, taxation, fiscal federalism as well as the tension between liberalism and democracy as organising principles of a modern society.

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Keywords: Constitutional Contractarianism, Original Position, Veil of Ignorance, Self-Interest, Value Judgments, Public Debt, Taxation, Fischal Federalism, Liberalism, Democracy

JEL Classification: H10