Positive constitutional economics II��a survey of recent developments

Analysis of the economic effects of constitutional rules has made substantial progress over the last decade. This survey provides an overview of this rapidly growing research area and also discusses a number of methodological issues and identifies underresearched areas. It argues that the next logical step of positive constitutional economics is to endogenize constitutional rules.     

The economic effects of federalism and?decentralization—a cross-country assessment

This paper explores the idea that institutional details matter and that attempts to estimate the economic effects of federalism by employing a simple dummy variable neglect potentially important institutional details. Based on a principal component analysis, seven aspects of both federalism and decentralization are used as variables for explaining differences in (1) fiscal policy, (2) government effectiveness, (3) economic productivity, and (4) happiness. The results show that institutional details do, indeed, matter. Different aspects of federalism impact on the outcome variables to different degrees. This study adds to our knowledge on the transmission mechanisms of federalism and decentralization.     

The economic effects of direct democracy—a first global assessment

This is the first study that assesses the economic effects of direct democratic institutions on a cross-country basis. We find that total spending as well as spending on welfare is lower in countries with mandatory referendums, consistent with the previous literature. But we also find that countries with national initiatives appear to spend more and be more corrupt. Finally, budget deficits, government effectiveness, productivity and “happiness” appear unrelated to direct democracy. Institutional detail thus matters a great deal. In general, the effects of direct-democratic institutions become stronger if the frequency of their actual use is taken into account. Effects are usually stronger in countries with weak democracies.     

The economic effects of judicial accountability: cross-country evidence

Judicial independence is not only a necessary condition for the impartiality of judges, it can also endanger it: judges that are independent could have incentives to remain uninformed, become lazy or even corrupt. It is therefore often argued that judicial independence and judicial accountability are competing ends. In this paper, it is hypothesized that they can be complementary means towards achieving impartiality and, in turn, the rule of law. It is further argued that judicial accountability can increase per capita income through various channels one of which is the reduction of corruption. First tests concerning the economic effects of JA are carried out and on the basis of 75 countries, these proxies are highly significant for explaining differences in per capita income drawing both on OLS as well as TSLS.

Internationalisation,global capitalism and the integration of Iran

Abstract

There is a common tendency to observe a process of homogenisation when the current international structure is analysed. However, the globalisation process embraces heterogeneities and contradictions stemming from the integration of different states into a single global structure. This article explores the role and motivations of domestic social classes in creating variations in the form of integration of their states into the global whole. It takes one of the odd cases at the centre of inquiry and particularly concentrates on the emergence of alternative forms to the neoliberal globalisation in the process of Iran’s integration into the global capitalism. The accumulation strategies adopted by the dominant class factions in Iran are investigated in order to reveal their dialectical relationship with the international capitalist structure. Their role in the international political economy of Iran demonstrates how social agents through their strategic activities create variations in the forms of integration into the global capitalism. The article compares the Iranian case to the varieties of integration of lately capitalised but not peripherised BRICS (Brazil, Russia, India, China and South Africa) states. This aims to reveal that whilst these countries have truly integrated into the global capitalist system, the internationalisation of their states contradicts the accumulation strategies of their dominant classes.     

Identifying the determinants of aggregate judicial performance: taxpayers’ money well spent?

There have been a sizeable number of studies trying to identify the determinants of judicial performance on the country level. Such a design is appropriate to identify underperforming individual judges or underperforming courts or court districts. However, it is not appropriate to identify institutions conducive to judicial performance. A dataset produced by the European Commission for the Efficiency of Justice contains very detailed information on the judicial systems of the 47 member countries of the Council of Europe. Drawing on robust regressions and using an objective variable, we find that (1) resolution rates are not a function of per capita income. In other words: poor countries can also afford them. (2) Countries belonging to the French legal tradition enjoy relatively lower resolution rates. (3) Resolution rates are negatively—and very robustly—correlated with court budget. As such, a higher budget will not “buy” more court decisions. (4) Resolution rates are never positively correlated with the presence of judicial councils. (5) Mandatory training for judges is correlated with higher resolution rates. Drawing on the subjectively perceived efficiency of the judiciary as the dependent variable we find that (6) countries belonging to both the French and the socialist legal tradition are less efficient and that (7) judicial councils are also negatively correlated with our measure of judicial efficiency, in other words: countries that do not have them should not introduce them.     

Do Municipal Mergers Improve Fiscal Outcomes?

Improved fiscal management is a frequent justification for promoting boundary consolidations. However, whether or not this is actually the case is rarely placed under rigorous empirical scrutiny. Hence, this article investigates if fiscal outcomes are improved when municipalities are merged. The basic argument is that the conceptualisation of fiscal management in political science is often too narrow as it focuses on the budget and pays hardly any attention to balances in the final accounts and debts – elements of management which are central to policy making. On this background, the causal relationship between municipal mergers and fiscal outcomes is analysed. Measured on the balance between revenues and expenses, liquid assets and debts, municipal mergers improve the fiscal outcomes of the municipalities in a five‐year perspective, although the pre‐reform effects tend to be negative. For liquidity and debt, however, the improvement only entails re‐establishing the levels prior to the reform. The testing ground is the recent mergers of Danish municipalities, which, it is argued, constitute a quasi‐experiment. This forms the basis of a Difference‐in‐Difference design, allowing the alleviation of endogeneity problems and enabling causal inference. The analysis is based on administrative data from the Danish municipalities in the period 2003–11.