US State Constitutional Entrenchment and Default in the Nineteenth Century
Journal of Institutional Economics (Forthcoming)
35 Pages Posted: 2 Jan 2019 Last revised: 9 Jul 2019
Date Written: July 5, 2019
Constitutional scholars emphasize the importance of an enduring, stable constitutional order. North and Weingast (1989) argue that it consistent with credible commitments to sustainable fiscal policies. However, this view is controversial and has received little empirical study. We use nineteenth century US state-level data to estimate relationships between constitutional design and the likelihood of a government default. Results indicate that more entrenched and less specific constitutions are associated with a lower likelihood of default.
Keywords: Default, Debt, Fiscal Crisis, Constitutions, Credible Commitment, Entrenchment
JEL Classification: H12, H73, H74, N21
Suggested Citation: Suggested Citation