The authors of The Economic Effects of Constitutions use econometric tools to study what they call the "missing link" between constitutional systems and economic policy; the book is an uncompromisingly empirical sequel to their previous theoretical analysis of economic policy. Taking recent theoretical work as a point of departure, they ask which theoretical findings are supported and which are contradicted by the facts. The results are based on comparisons of political institutions across countries or time, in a large sample of contemporary democracies. They find that presidential/parliamentary and majoritarian/proportional dichotomies influence several economic variables: presidential regimes induce smaller public sectors, and proportional elections lead to greater and less targeted government spending and larger budget deficits. Moreover, the details of the electoral system (such as district magnitude and ballot structure) influence corruption and structural policies toward economic growth.
Persson and Tabellini's goal is to draw conclusions about the causal effects of constitutions on policy outcomes. But since constitutions are not randomly assigned to countries, how the constitutional system was selected in the first place must be taken into account. This raises challenging methodological problems, which are addressed in the book. The study is therefore important not only in its findings but also in establishing a methodology for empirical analysis in the field of comparative politics.
About the Authors
Torsten Persson is Director of the Institute for International Economic Studies at Stockholm University and Centennial Professor at the London School of Economics.
Guido Tabellini is Professor of Economics at Bocconi University in Milan and President of the Innocenzo Gasparini Institute of Economic Research, also at Bocconi University.
"Persson and Tabellini's The Economic Effects of Constitutions beautifully complements their earlier Political Economics. This sequel defines and makes serious empirical progress on a broad research agenda for the complex issue of how constitutional statutes (from forms of government to electoral rules) shape policy outcomes (such as the size of the welfare state and the distribution of benefits). Written by two leading contributors to modern political economy, this stimulating and very readable book is essential for all those concerned with and involved in constitutional design."
—Jean Tirole, IDEI, Toulouse
"The authors have succeeded in producing an extraordinary book that will open up this field and be the definitive reference for many years to come."
—Roger B. Myerson, W. C. Norby Professor of Economics, University of Chicago
"This work is destined to be a much-read monograph on an important subject: how much we can learn from cross-sectional variation in certain constitutional rules across the world. It is much the best work on the issue to date."
—Timothy Besley, London School of Economics & Political Science
“Democracy comes in many different forms—presidential and parliamentary, with elections based on plurality or proportional representation, and so on. Path-breaking research by Persson and Tabellini has shown that these differences in political constitutions lead to large and systemic differences in economic outcomes. This book consolidates and extends their empirical work. It should be required reading for intellectual leaders in all countries contemplating reforms of their political institutions, and for all political scientists and economists who study such reforms.”
—Avinash Dixit, Sherrerd University Professor of Economics, Princeton University