Constitutional Economics

Prof. Dr. Bernhard Neumärker

Institute for General Economic Research
Section for Economic Policy and Constitutional Economic Theory

Lecture

Time: Thu, 8-10 hrs. c.t.
Place: Room 3042

Tutorial

Time: Mon, 14-16 hrs. c.t.
Place: Room 3043

Supplementary Tutorials

Tutor: Nicolas Weinhold, philosophyandeconomics |at| gmail.com

• General Group: Wed 12-14 hrs. c.t., Breisacher Tor R 104
• NBS Group: Wed 16-18 hrs. c.t., Room 1036

Start

Lecture: First semester week.
Tutorial: Second semester week.
Supplementary Tutorials: Third semester week.

Announcements

Lecture/tutorial swap

• Second week of June: lecture takes place on Mon, June 6, and tutorial on Thu, June 9.

Target Group

This course is designated for first-year IMP-Students (Master of Economics and Politics), Diploma-Students (Hauptstudium) and students of other faculties (Magister).

Credits

IMP, Diploma (creditable to Pflichtfach "Wirtschaftspolitik: Ordnungspolitik" and Pflichtwahlfach "Ordnungs- und Wettbewerbspolitik") and other students: 6 Credit Points (exam including tutorial).

Support

Stephan Wolf
Room: 2436
E-mail: stephan.wolf@vwl.uni-freiburg.de
Office hours: On appointment

Discussion Forum

There is also a discussion forum on the course content moderated by Stephan Wolf.

Downloads

Lecture:

• Syllabus
• Slides Part I-II
• Slides Part III

Tutorial:

• Outline
• Tutorial 1
• Tutorial 2
• Tutorial 3
• Tutorial 4 (completed version)
• Tutorial 5
• Tutorial 6
• Tutorial 7
• Tutorial 8
• Tutorial 9
• Tutorial 10
• Tutorial 11
• Questions for Exam Preparation

Supplementary Tutorial:

• Catalogue of Questions

Outline and References

Outline

1. Introduction
2. The constitutional perspective in economics
   1. Constitutional and orthodox view of economics [3,4,6,8]
   2. The methodological hard core of constitutional analysis [4]
   3. Constitutional economics as a part of modern political economy [3,4,14]
   4. The logic of constitutional constraints [3,4,6,14]
   5. Constitutional design and constitutional reform [2,9,10,13]
   6. Constitutions as social contracts [10,12,13,14]
      6.1 Explicit and implicit contracts
      6.2 Complete and incomplete contracts
   7. Normative and positive constitutional economics [1,4,9,11,13,15]
      7.1 Emergence and stability of constitutions
      7.2 Economic effects of constitutional rules
      7.3 'Optimal' constitutions
3. Applications
   1. Constitutional design of democratic institutions [1,7,10,14]
   2. Fiscal constitutions [3]
   3. Constitutional rules for market regulation [5,13]
   4. Constitutional change and rent-seeking [8,14]
   5. Economic policy consequences of constitutional arrangements [5,15]

References

• [1] Acemoglu, D., Robinson, J.A.: Economic Origins of Dictatorship and Democracy, Cambridge 2006.
  
• [2] Bailey, M.J.: Constitution for a Future Country, Basingstoke et al. 2001.
  
• [3] Brennan, G., Buchanan, J. M.: The Power to Tax, Cambridge et al. 1980.
  
• [4] Brennan, G., Buchanan, J. M.: The Reason of Rules, Cambridge et al. 1985.
• [5] Buchanan, J. M.: The Domain of Constitutional Economics, in: Constitutional Political Economy, vol. 1, no. 1 (1990), 1-18.
• [6] Buchanan, J. M.: The Constitution of Economic Policy, in: American Economic Review 77 (1987), 243-250.
• [7] Buchanan, J. M.: The Limits of Liberty, Chicago 1975.
• [8] Buchanan, J.M., Tullock, G.: The Calculus of Consent, Ann Arbor 1962.
• [9] Caplin, A. S, Nalebuff, B. J.: On 64%-Majority Rule, in: Econometrica, vol. 56(4) (1988), 787-814.
• [10] Cooter, R.D.: The Strategic Constitution, Princeton/N.J. et al. 2000.
• [11] Dixit, A.K.: The Making of Economic Policy, Cambridge/Mass. 1996.
• [12] Gersbach, H.: Designing Democracy, Berlin et al. 2005.
• [13] Greif, A.: Institutions and the Path to the Modern Economy, Cambridge 2006.
• [14] Hardin, R.: Liberalism, Constitutionalism, and Democracy, Oxford 1999.
• [15] Laffont, J.-J.: Incentives and Political Economy, Oxford et al. 2000.
• [16] Maskin, E. S., Riley, J. G.: Monopoly with incomplete information, in: RAND Journal of Economics, vol. 15, issue 2 (1985), 171-196.
• [17] Mueller, D.C.: Public Choice III, Cambridge 2003.
• [18] Mueller, D.C.: Constitutional Public Choice, in: Perspectives on Public Choice, Cambridge 1997
• [19] Neumärker, K.J.B.: Some Analytical Foundations of Constitutional Public Finance, Manuscript, Freiburg 2009.
• [20] Neumärker, K.J.B.: Private Provision of Public Goods as Strategic Precommitment, Manuscript, Freiburg 2004.
• [21] Persson, T., Tabellini, G.: The Economic Effects of Constitutions, Cambridge/ Mass. 2003.
• [22] Salanié, B.: The Economics of Contracts, 2^nd edition, Cambridge et al. 2005.
• [23] Tirole, J.: Incomplete Contracts: Where do we stand?, Econometrica, vol. 67, no. 4(1999), 741-781.
• [24] Voigt, S.: Positive constitutional economics: A survey, in: Public Choice 90 (1997), 11–53.

Supplementary articles will be announced.