Constitutional Economics

Prof. Dr. Bernhard Neumärker

Institute for General Economic Research
Section for Economic Policy

Lecture

Time: Tue. 8 - 10h c.t.
Place: Room 1098

Tutorial

Time: Wed. 8 - 10h c.t.
Place: Room 2121

Please note: From 5th of June to 10th of July the Tutorial will take place Thu. 8 - 10h c.t. in room 1021.

Start

Lecture: Second semester week.
Tutorial: Third semester week.

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).

Downloads

Lecture:

•  Outline.
• Script Part I - II.7.
• Script Part III.2.

Tutorial:

•  Script Tutorials 1 - 6.

Supplementary Tutorial:

• Solution sketches (part I).
• Solution sketches (part II).

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 Constitution of Economic Policy, in: American Economic Review 77 (1987), 243-250.
6. Buchanan, J. M.: The Limits of Liberty, Chicago 1975.
7. Buchanan, J.M., Tullock, G.: The Calculus of Consent, Ann Arbor 1962.
8. Cooter, R.D.: The Strategic Constitution, Princeton/N.J. et al. 2000.
9. Dixit, A.K.: The Making of Economic Policy, Cambridge/Mass. 1996.
10. Gersbach, H.: Designing Democracy, Berlin et al. 2005.
11. Greif, A.: Institutions and the Path to the Modern Economy, Cambridge 2006.
12. Hardin, R.: Liberalism, Constitutionalism, and Democracy, Oxford 1999.
13. Laffont, J.-J.: Incentives and Political Economy, Oxford et al. 2000.
14. Mueller, D.C.: Public Choice III, Cambridge 2003.
15. Persson, T., Tabellini, G.: The Economic Effects of Constitutions, Cambridge/ Mass. 2003.

Supplementary articles will be announced.