The rule of law and sustainability of the constitution: The case of tax evasion
AbstractWhy do rulers play by the rules? We show that the legality requirement under the rule of law implements an endogenous enforcement mechanism supporting constitutionality. Agents which do not obey unconstitutional legal norms are not sanctioned under constitutional rule. A principal who defects from the constitution but cannot commit himself to never reinstall the constitution finds law enforcement more difficult. As more agents disobey, enforcement becomes less effective. The expectation of an eventual return to constitutionality becomes self-fulfilling. We show this mechanism to be effective in deterring a government from violating constitutional norms. --
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Bibliographic InfoPaper provided by University of Freiburg, Department of Economic Policy and Constitutional Economic Theory in its series The Constitutional Economics Network Working Papers with number 01-2012.
Date of creation: 2012
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constitution; dynamic policy constraints; tax evasion; global games;
Find related papers by JEL classification:
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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