Financial Crises and Constitutional Compromise

38 Pages Posted: 11 Sep 2017

See all articles by Georg Vanberg

Georg Vanberg

Duke University - Department of Political Science

Mitu Gulati

University of Virginia School of Law

Date Written: September 6, 2017


Constitutional constraints are often designed with crisis in mind: Framers wish to constrain the exercise of power precisely in those circumstances in which policymakers will be tempted to take actions that may violate underlying normative commitments. These constraints are only as strong as the willingness and ability of courts to enforce them though; and because judges care about both themselves and policy outcomes, they are sometimes less than willing to enforce constitutional constraints. Existing scholarship has explored this phenomenon, focusing primarily on the possibility that the weakness of courts may prevent them from effectively policing constitutional boundaries in the face of governments determined to deal with a crisis. We suggest that such strategic judicial retreat may also result from judicial strength. In times of crisis, courts that command significant authority, and are likely to garner compliance with their rulings, confront a quandary that weaker courts can escape: The enforcement of constitutional boundaries may prevent an effective governmental response to a crisis. If judges are sufficiently concerned about the practical consequences of hamstringing a government under these circumstances, they may engage in judicial self-censoring not because they are weak, but because they are strong.

Keywords: constitutional crises, financial crises, courts, gold clauses, OMT

JEL Classification: F33, H63, H12, K12

Suggested Citation

Vanberg, Georg and Gulati, Mitu, Financial Crises and Constitutional Compromise (September 6, 2017). Duke Law School Public Law & Legal Theory Series No. 2017-59, Available at SSRN: or

Georg Vanberg

Duke University - Department of Political Science ( email )

140 Science Drive (Gross Hall), 2nd floor
Duke University Mailcode: 90204
Durham, NC 27708-0204
United States

Mitu Gulati (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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