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Constitutionalism and credibility in reforming economies

  • Raj M. Desai
  • Anders Olofsg�rd

There has been relatively little investigation of the effect of constitutional transformations on the economic transition in post-communist countries. We develop a simple signalling model in which constitutionalism - a commitment to limit political power and provide judicial defence of basic rights - reinforces the credibility of pro-market candidates' electoral promises and boosts public support for economic reforms. These findings are tested using opinion poll data on public support for reform in Central and Eastern Europe, and in the former Soviet Union, in the 1990s. In a two-stage procedure we show that public support for market reforms is higher in countries where incumbents have taken deliberate steps to increase political accountability and judicial independence. Public support also spurs actual economic reform. Copyright (c) 2006 The Authors Journal compilation (c) 2006 The European Bank for Reconstruction and Development..

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Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 14 (2006)
Issue (Month): 3 (07)
Pages: 479-504

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Handle: RePEc:bla:etrans:v:14:y:2006:i:3:p:479-504
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