Constitutional Rules, Economic Policy, and Economic Outcomes

30 November 2015

Is the state's constitution relevant for its economy? Economists, in particular those active in the field of Economic Analysis of Law and Constitutional Economics, have no doubts that the answer to this question is positive. However, many different approaches and techniques have been employed in economic studies of the effects of constitutions and the results of these studies have often been ambiguous, in some cases even mutually contradicting. A more detailed analysis of this literature also reveals several methodological caveats, as well as problems stemming from the limited availability of inevitable data. PhD Katarzyna Metelska-Szaniawska’s project constituted an attempt at confronting these problems obstructing the development of further research concerning the relevance of the constitutional framework for policy decisions and economic outcomes.

The main aim of the project was to provide the answer to the question which rules defined within constitutions of states shape economic policy and the effects of such policy in these countries. A survey of existing constitutional economics (and related) literature, as well as the unscrambling of the theoretical framework for analysis, allowed to formulate the main thesis statement, according to which constitutional solutions strengthening the constitutional commitment- enhancing mechanism for political decision makers (political elites) with regard to policy decisions constitute a framework conducive to the successful functioning of the economy.

Broad empirical studies conducted within the project for post-socialist countries of Europe and Asia confirmed that rules enhancing the constitutional commitment mechanism for political decision makers at the time of designing and implementing economic reforms undertaken by these states after 1989 were relevant for performance in the area of these reforms. The most significant aspect of the constitutional framework in this context was de facto constitutional court independence - both a meaningful "brake" within the system of power in the state and a vital instrument allowing for effective enforcement of constitutional rights and freedoms. For some groups of countries it was also important whether their constitutions envisaged a relatively more or less concentrated power within the state, as well as how broad the operative bills of rights were. The functioning of direct democracy mechanisms also proved relevant, just as the degree of support for the constitution within the society. These results have successfully passed a series of verifications, employing refined econometric techniques.

The implications of this project constitute a valuable contribution to the development of Constitutional Economics in an international dimension, both as regards the theory, as well as for further empirical studies. In relation to the latter, a particularly important achievement of this project is the proposed application, for the first time in studies of effects of constitutions, of the synthetic control method allowing to counteract problems stemming from endogeneity of constitutional rules and economic policy (and its outcomes).

Knowledge about the consequences of adopting certain constitutional rules allows for more effective search for best constitutional solutions suitable to the needs of particular countries under specific internal and external conditions. The analyses conducted within the project may be particularly valuable for Poland in light of the ongoing debate regarding the potential amendment of the Polish 1997 Constitution and the system of government in this country.

Publications:

  • Katarzyna Metelska-Szaniawska Economic Effects of Post-Socialist Constitutions 25 Years from the Outset of Transition. The Constitutional Political Economy Approach, Frankfurt am Main: Peter Lang Internationalen Verlag der Wissenschaften, 2016 (195 s., forthcoming).
  • Jan Fałkowski, Katarzyna Metelska-Szaniawska, “Przyczyny ustanawiania i stabilność konstytucji państwa – perspektywa ekonomiczna”, Gospodarka Narodowa, 3(277), 2015, 79–105.
  • Katarzyna Metelska-Szaniawska, Economic Effects of Post-Socialist Constitutions Revisited (nearly) 25 Years from the Outset of Transition, WNE Working Papers, 33(181), 2015, 1–23.

 

metelskaKatarzyna Metelska-Szaniawska, PhD – assistant professor at the Department of Political Economy at the Faculty of Economic Sciences UW, director of the Centre for Economic Analyses of Public Sector (CEAPS). Specializes in Constitutional Economics, Economic Analysis of Law and Public Choice. She defended her PhD thesis entitled: Constitutional Determinants of Economic Reforms in Post-Socialist Countries. An Empirical Study in 2006 at the Faculty of Economic Sciences. She coordinated various projects financed by ministerial research agencies, currently she supervises a project entitled Formal versus De Facto Rules in Economic Studies of Postsocialist Countries' Constitutions. President of the Polish Association of Law and Economics between (2009–2014), since 2012 member of the board / vice-president of the European Association of Law and Economics (EALE). 

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