Book contents
- Frontmatter
- Contents
- List of tables
- List of figures
- List of contributors
- Acknowledgements
- Foreword
- A Road Map for the Guidebook
- Introduction to New Institutional Economics: A Report Card
- Part I Foundations
- Part II Methodology
- Part III Strategy and Management
- Part IV Industrial Organization
- Part V Institutional Design
- 15 Buy, Lobby or Sue: Interest Groups' Participation in Policy Making: A Selective Survey
- 16 Regulation and Deregulation in Network Industry
- 17 Constitutional Political Economy: Analyzing Formal Institutions at the Most Elementary Level
- 18 New Institutional Economics and Its Application on Transition and Developing Economies
- Part VI Challenges to Institutional Analysis
- Notes
- References
- Index
17 - Constitutional Political Economy: Analyzing Formal Institutions at the Most Elementary Level
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- List of tables
- List of figures
- List of contributors
- Acknowledgements
- Foreword
- A Road Map for the Guidebook
- Introduction to New Institutional Economics: A Report Card
- Part I Foundations
- Part II Methodology
- Part III Strategy and Management
- Part IV Industrial Organization
- Part V Institutional Design
- 15 Buy, Lobby or Sue: Interest Groups' Participation in Policy Making: A Selective Survey
- 16 Regulation and Deregulation in Network Industry
- 17 Constitutional Political Economy: Analyzing Formal Institutions at the Most Elementary Level
- 18 New Institutional Economics and Its Application on Transition and Developing Economies
- Part VI Challenges to Institutional Analysis
- Notes
- References
- Index
Summary
Introduction
The economic analysis of constitutions is a fledgling research program also known as “constitutional economics” or “constitutional political economy.” It has broadened the standard research program of economics: standard economics is interested in studying choices within rules, thus assuming rules to be exogenously given and fixed. Constitutional economics broadens this research program by analyzing the choice of rules using the standard method of economics, that is, rational choice. Constitutional political economy (CPE) is part of new institutional economics (NIE) because constitutional rules are institutions. They can be considered the most basic layer of formal institutions.
James M. Buchanan, one of the founders of the new research program, defines constitutions as “a set of rules which constrain the activities of persons and agents in the pursuits of their own ends and objectives” (Buchanan 1977, p. 292). Defined as such, quite a few rule systems could be analyzed as constitutions: a firm's partnership agreement as well as the statute of a church. This chapter focusses, however, on the constitution of states.
There are two broad avenues in the economic analysis of constitutions: (1) the normative branch, which is interested in legitimizing the state and actions of its representatives; it is thus interested in identifying conditions in which the outcomes of collective choices can be judged as “fair” or “efficient”; and (2) the positive branch, which is interested in explaining: (a) the (economic) effects of alternative constitutional rules; and (b) the emergence and modification of constitutional rules.
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- New Institutional EconomicsA Guidebook, pp. 363 - 388Publisher: Cambridge University PressPrint publication year: 2008
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