Constitutional scholars have long argued the importance of an enduring and stable constitutional order. As an important example, North and Weingast (1989) argued that such an order is conducive to government credibly committing to sustainable fiscal policies. However, there is significant debate regarding the efficacy of such a constitutional order. As well, the empirical fact of the matter is that most (country-level or US state-level) constitutions are short lived. Still, the efficacy of such a constitutional order towards fiscal sustainability has received little empirical study. Within this paper we use nineteenth century US state-level data to estimate relationships between dimensions of constitutional design and the likelihood that a government defaults on its debt. The results indicate that more entrenched (rigid and enduring) and less specific/detailed constitutions are associated with a lower likelihood of default.
|Journal||Journal of Institutional Economics|
|State||Published - Dec 2019|