The Evolution of a Fiscal Constitution when Individuals are Theoretically Uncertain
University of Heidelberg - Alfred Weber Institute for Economics; Walter Eucken Institut
European Journal of Law and Economics, Vol. 17, pp. 97-116, January 2004
In contrast to the contractarian approach to constitutional economics, we follow Voigt (1999) in assuming that constitutional rules are closely connected to informal institutions and that their evolution is a matter of interest group activity and implicit re-interpretation. We add to this the assumption of theoretical uncertainty of individuals regarding the working properties of constitutional rules. Collective learning processes are considered as the third driving force of constitutional evolution, and at the same time as the source of path-dependencies which allow suboptimal constitutions to persist. Finally, it is argued that direct legislation offers more protection than a written fiscal constitution.
Keywords: Positive constitutional economics, collective learning, path-dependence, rule-evolution
JEL Classification: K10, H10, Z13Accepted Paper Series
Date posted: July 6, 2005
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