Working Paper: NBER ID: w9006
Authors: Philippe Aghion; Alberto Alesina; Francesco Trebbi
Abstract: Political institutions influence economic policy, but they are themselves endogenous since they are chosen, in some way, by members of the polity. An important aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks and balances, legislative action is too often blocked. As our critical constitutional choice we focus upon the size of the minority needed to block legislation, or conversely the size of the (super) majority needed to govern. We analyze both 'optimal' constitutional design and 'positive' aspects of this process. We derive several empirical implications which we then discuss.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| degree of insulation (m) (Y20) | likelihood of passing reforms (D72) |
| degree of insulation (m) (Y20) | risk of expropriation by leaders (P26) |
| optimal choice of institutions (D02) | efficiency of economic policy outcomes (D78) |