Working Paper: NBER ID: w8759
Authors: rafael la porta; florencio lpez-de-silanes; cristian popeleches; andrei shleifer
Abstract: Hayek (1960) distinguishes the institutions of English freedom, which guarantee the independence of judges from political interference in the administration of justice, from those of American freedom, which allow judges to restrain law-making powers of the sovereign through constitutional review. We create a data base of constitutional rules in 71 countries that reflect these institutions of English and American freedom, and ask whether these rules predict economic and political freedom in a cross-section of countries. We find that the English institutions of judicial independence are strong predictors of economic freedom and weaker predictors of political freedom. The American institutions of checks and balances are strong predictors of political but not of economic freedom. Judicial independence explains half of the positive effect of common law legal origin on measures of economic freedom.
Keywords: No keywords provided
JEL Codes: k0; n40; p10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Judicial independence (K16) | Economic freedom (P19) |
| Common law legal origin (K15) | Economic freedom (P19) |
| Judicial independence (K16) | Common law legal origin (K15) |
| Checks and balances (D72) | Political freedom (P26) |
| English freedom institutions (E02) | Economic freedom (P19) |
| English freedom institutions (E02) | Political freedom (P26) |
| American institutions (I29) | Political freedom (P26) |