Constitutionalism and Credibility in Reforming Economies
Raj M. Desai
Georgetown University - Edmund A. Walsh School of Foreign Service (SFS); The Brookings Institution
Georgetown University - Edmund A. Walsh School of Foreign Service (SFS); Georgetown University - Department of Economics; Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)
Economics of Transition, Vol. 14, No. 3, pp. 479-504, July 2006
There has been relatively little investigation of the effect of constitutional transformations on the economic transition in post-communist countries. We develop a simple signalling model in which constitutionalism - a commitment to limit political power and provide judicial defence of basic rights - reinforces the credibility of pro-market candidates electoral promises and boosts public support for economic reforms. These findings are tested using opinion poll data on public support for reform in Central and Eastern Europe, and in the former Soviet Union, in the 1990s. In a two-stage procedure we show that public support for market reforms is higher in countries where incumbents have taken deliberate steps to increase political accountability and judicial independence. Public support also spurs actual economic reform.
Number of Pages in PDF File: 26Accepted Paper Series
Date posted: June 29, 2006
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