IDEAS home Printed from https://ideas.repec.org/a/cmn/journl/y2014i2p79-104.html
   My bibliography  Save this article

Judges as Fiscal Activists: Can Constitutional Review Shape Public Finance?

Author

Listed:
  • Jaroslaw Kantorowicz

    (University of Hamburg)

Abstract

The judicialization of politics, or alternatively, politization of the judiciary has been much discussed over the last twenty years. Despite this, the way judges influence fiscal policy outcomes remains, to a large extent, unexplored. This paper attempts, at least partially, to fill this research gap. A judicial (constitutional) review constitutes the central element of the current analysis since it is considered as a key institutional device through which Constitutional (Supreme) Courts intervene in politics, including public finance. Specifically, this paper seeks to investigate empirically whether there is any systematic pattern according to which judges executing judicial review shape fiscal outcomes. The conceptual framework is based on the strategic interaction model and the assumption that the Constitutional Courts reflect public opinion (i.e. the Court as a majoritarian institution). Some preliminary results for a panel of 24 EU countries in the period 1995–2005 suggest that a strong judicial review correlates with a smaller size of government, measured as government income to GDP.

Suggested Citation

  • Jaroslaw Kantorowicz, 2014. "Judges as Fiscal Activists: Can Constitutional Review Shape Public Finance?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 79-104, June.
    • Handle: RePEc:cmn:journl:y:2014:i:2:p:79-104
    as

    Download full text from publisher

    File URL: http://www.eaco.eu/wp-content/uploads/2015/04/kantorowicz.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Roland Vaubel, 2009. "Constitutional courts as promoters of political centralization: lessons for the European Court of Justice," European Journal of Law and Economics, Springer, vol. 28(3), pages 203-222, December.
    2. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    3. Anne van Aaken & Lars P. Feld & Stefan Voigt, 2010. "Do Independent Prosecutors Deter Political Corruption? An Empirical Evaluation across Seventy-eight Countries," American Law and Economics Review, Oxford University Press, vol. 12(1), pages 204-244.
    4. Roland Vaubel, 1996. "Constitutional safeguards against centralization in federal states: An international cross-section analysis," Constitutional Political Economy, Springer, vol. 7(2), pages 79-102, June.
    5. Brender, Adi, 2003. "The effect of fiscal performance on local government election results in Israel: 1989-1998," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2187-2205, September.
    6. Sam Peltzman, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 327-361.
    7. Gely, Rafael & Spiller, Pablo T., 1992. "The political economy of supreme court constitutional decisions: The case of Roosevelt's court-packing plan," International Review of Law and Economics, Elsevier, vol. 12(1), pages 45-67, March.
    8. William M. Landes, 1975. "Economic Analysis of Political Behavior," NBER Books, National Bureau of Economic Research, Inc, number land75-1, March.
    9. Stimson, James A. & Mackuen, Michael B. & Erikson, Robert S., 1995. "Dynamic Representation," American Political Science Review, Cambridge University Press, vol. 89(3), pages 543-565, September.
    10. Marcela Eslava, 2006. "The Political Economy of Fiscal Policy: Survey," Research Department Publications 4487, Inter-American Development Bank, Research Department.
    11. Ludger Schuknecht, 1994. "Political Business Cycles and Expenditure Policies in Developing Countries," IMF Working Papers 1994/121, International Monetary Fund.
    12. Marcela Eslava, 2006. "The Political Economy of Fiscal Policy: Survey," Research Department Publications 4487, Inter-American Development Bank, Research Department.
    13. Afonso, António & Furceri, Davide, 2010. "Government size, composition, volatility and economic growth," European Journal of Political Economy, Elsevier, vol. 26(4), pages 517-532, December.
    14. Richard Wagner, 1976. "Revenue structure, fiscal illusion, and budgetary choice," Public Choice, Springer, vol. 25(1), pages 45-61, March.
    15. Hayo, Bernd & Voigt, Stefan, 2007. "Explaining de facto judicial independence," International Review of Law and Economics, Elsevier, vol. 27(3), pages 269-290, September.
    16. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    17. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
    18. Alberto Alesina & Dorian Carloni & Giampaolo Lecce, 2012. "The Electoral Consequences of Large Fiscal Adjustments," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 531-570, National Bureau of Economic Research, Inc.
    19. Marcelo Soto, 2009. "System GMM Estimation With A Small Sample," UFAE and IAE Working Papers 780.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    20. Christopher J. Casillas & Peter K. Enns & Patrick C. Wohlfarth, 2011. "How Public Opinion Constrains the U.S. Supreme Court," American Journal of Political Science, John Wiley & Sons, vol. 55(1), pages 74-88, January.
    21. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753.
    22. Norpoth, Helmut & Segal, Jeffrey A. & Mishler, William & Sheehan, Reginald S., 1994. "Popular Influence on Supreme Court Decisions," American Political Science Review, Cambridge University Press, vol. 88(3), pages 711-724, September.
    23. Landes, William M & Posner, Richard A, 1975. "The Independent Judiciary in an Interest-Group Perspective," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 875-901, December.
    24. Alberto Alesina & Roberto Perotti & José Tavares, 1998. "The Political Economy of Fiscal Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 197-266.
    25. Mehrhoff, Jens, 2009. "A solution to the problem of too many instruments in dynamic panel data GMM," Discussion Paper Series 1: Economic Studies 2009,31, Deutsche Bundesbank.
    26. Hansen, John Mark, 1998. "Individuals, Institutions, and Public Preferences over Public Finance," American Political Science Review, Cambridge University Press, vol. 92(3), pages 513-531, September.
    27. Deener, David, 1952. "Judicial Review in Modern Constitutional Systems," American Political Science Review, Cambridge University Press, vol. 46(4), pages 1079-1099, December.
    28. Andreas Bergh & Martin Karlsson, 2010. "Government size and growth: Accounting for economic freedom and globalization," Public Choice, Springer, vol. 142(1), pages 195-213, January.
    29. Silika Prohl & Friedrich Schneider, 2009. "Does Decentralization Reduce Government Size? A Quantitative Study of the Decentralization Hypothesis," Public Finance Review, , vol. 37(6), pages 639-664, November.
    30. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
    31. Feld, Lars P. & Voigt, Stefan, 2003. "Economic growth and judicial independence: cross-country evidence using a new set of indicators," European Journal of Political Economy, Elsevier, vol. 19(3), pages 497-527, September.
    32. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, March.
    33. Fabio Padovano & Grazia Sgarra & Nadia Fiorino, 2003. "Judicial Branch, Checks and Balances and Political Accountability," Constitutional Political Economy, Springer, vol. 14(1), pages 47-70, March.
    34. Werner W. Pommerehne & Friedrich Schneider*, 1978. "Fiscal Illusion, Political Institutions, And Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408, August.
    35. Mishler, William & Sheehan, Reginald S., 1993. "The Supreme Court as a Countermajoritarian Institution? The Impact of Public Opinion on Supreme Court Decisions," American Political Science Review, Cambridge University Press, vol. 87(1), pages 87-101, March.
    36. Gely, Rafael & Spiller, Pablo T, 1990. "A Rational Choice Theory of Supreme Court Statutory Decisions with Applications to the State Farm and Grove City Cases," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 263-300, Fall.
    37. Roger D. Congleton & Birgitta Swedenborg (ed.), 2006. "Democratic Constitutional Design and Public Policy: Analysis and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033496, December.
    38. Mehrhoff, Jens, 2009. "A solution to the problem of too many instruments in dynamic panel data GMM," IBES Diskussionsbeiträge 171, University of Duisburg-Essen, Institute of Business and Economic Studie (IBES).
    39. Romero-Ávila, Diego & Strauch, Rolf, 2008. "Public finances and long-term growth in Europe: Evidence from a panel data analysis," European Journal of Political Economy, Elsevier, vol. 24(1), pages 172-191, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sacchi, Agnese & Salotti, Simone, 2015. "The impact of national fiscal rules on the stabilisation function of fiscal policy," European Journal of Political Economy, Elsevier, vol. 37(C), pages 1-20.
    2. Zuzana Machová & Igor Kotlán, 2015. "Právní jistota - možný problém daňové politiky vyspělých zemí? [Legal Certainty - Possible Problem of Tax Policy in Developed Countries?]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(7), pages 833-846.
    3. Nejc Brezovar, 2017. "Judicial Activism Contributing to the Understanding of Social State Principle(s) - Constitutional Court of Slovenia at the Crossroads," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 19-30, March.
    4. Dove, 2016. "Judicial independence and economic freedom in the US states," Applied Economics Letters, Taylor & Francis Journals, vol. 23(1), pages 78-83, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefan Voigt, 2011. "Positive constitutional economics II—a survey of recent developments," Public Choice, Springer, vol. 146(1), pages 205-256, January.
    2. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.
    3. George Tridimas, 2010. "Constitutional judicial review and political insurance," European Journal of Law and Economics, Springer, vol. 29(1), pages 81-101, February.
    4. Lars P. Feld & Stefan Voigt, 2004. "Making Judges Independent – Some Proposals Regarding the Judiciary," CESifo Working Paper Series 1260, CESifo.
    5. Varvara Isyuk, 2014. "Resuming bank lending in the aftermath of the Capital Purchase Program," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01093414, HAL.
    6. Falcó-Gimeno, Albert & Jurado, Ignacio, 2011. "Minority governments and budget deficits: The role of the opposition," European Journal of Political Economy, Elsevier, vol. 27(3), pages 554-565, September.
    7. Varvara Isyuk, 2014. "Resuming bank lending in the aftermath of the Capital Purchase Program," Documents de travail du Centre d'Economie de la Sorbonne 14062, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. Margarita Katsimi & Vassilis Sarantides, 2015. "Public investment and reelection prospects in developed countries," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 471-500, October.
    9. Dreher, Axel & Voigt, Stefan, 2011. "Does membership in international organizations increase governments' credibility? Testing the effects of delegating powers," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 326-348, September.
    10. Francois Facchini, 2018. "What Are the Determinants of Public Spending? An Overview of the Literature," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(4), pages 419-439, December.
    11. Fabio Padovano, 2009. "The time-varying independence of Italian peak judicial institutions," Constitutional Political Economy, Springer, vol. 20(3), pages 230-250, September.
    12. Habiyaremye, Alexis, 2016. "Is Sino-African trade exacerbating resource dependence in Africa?," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 1-12.
    13. Facchini, Francois, 2014. "The determinants of public spending: a survey in a methodological perspective," MPRA Paper 53006, University Library of Munich, Germany.
    14. Varvara Isyuk, 2014. "Resuming bank lending in the aftermath of the Capital Purchase Program," Post-Print halshs-01093414, HAL.
    15. Marcela Eslava, 2011. "The Political Economy Of Fiscal Deficits: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 645-673, September.
    16. Marcela Eslava & Oskar Nupia, 2010. "Political Fragmentation and Government Spending: Bringing Ideological Polarization into the Picture," Documentos CEDE 6713, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Emna Trabelsi, 2022. "Macroprudential Transparency and Price Stability in Emerging and Developing Countries," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(1), pages 105-129.
    18. Niklas Potrafke, 2009. "Does government ideology influence political alignment with the U.S.? An empirical analysis of voting in the UN General Assembly," The Review of International Organizations, Springer, vol. 4(3), pages 245-268, September.
    19. Belke, Ansgar & Potrafke, Niklas, 2012. "Does government ideology matter in monetary policy? A panel data analysis for OECD countries," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 1126-1139.
    20. Joseph L. Dieleman & Michael Hanlon, 2014. "Measuring The Displacement And Replacement Of Government Health Expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 129-140, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cmn:journl:y:2014:i:2:p:79-104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Helena Campbelle (email available below). General contact details of provider: http://www.eaco.eu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.