Does Constitutional Entrenchment Matter for Economic Freedom?

Abstract

A growing number of studies explore the determinants of economic freedom. Very few of them consider constitutional design. We study entrenchment, i.e., the extent to which constitutions are more costly to change than ordinary policies and institutions. We utilize 1970-2017 data and study episodes where countries adopted meaningfully more entrenched constitutions. Using matching methods, we construct plausible counterfactuals against which to compare their post-treatment changes in economic freedom. We report no significant effects on overall freedom. There is some evidence that entrenchment leads to smaller government size, more regulation, and weaker property rights. However, none of these results are robust.

Keywords: constitutions; entrenchment; constitutional rigidity; political economy; institution; economic freedom

JEL Classification: P00, P16, P48