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The constitution of economic growth: Testing the prosperity effects of a Madisonian model on a panel of countries 1980‐2000

  • Justesen, Mogens K.
  • Kurrild-Klitgaard, Peter

Political scientists and economists increasingly agree that institutions may influence economic growth, but there is little general agreement on what institutions tend to produce what consequences. We apply public choice insights for a theoretical analysis that may be termed “Madisonian”: Institutions that divide political power between multiple veto players and institutions that protect private property rights may be expected to have positive effects on economic growth. We analyze data from a panel of countries for the period 1980‐2000 in order to study the relationships, including a series of “extreme bounds” analyses in order to test the robustness of the statistical results. We find that particularly the presence of secure private property has a significant, positive and robust effect on economic growth and that when outliers are excluded a configuration where political power is dispersed among more veto players has a similar effect.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36063.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:36063
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  1. David Stasavage, 2000. "Private Investment and Political Uncertainty," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 25, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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  10. Locke, John, 1690. "Two Treatises of Government," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number locke1690a.
  11. Kurrild-Klitgaard Peter & Berggren Niclas, 2004. "Economic Consequences of Constitutions: A Theory and Survey," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 14(1), pages 1-41, March.
  12. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
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  14. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, June.
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