A Second Best Theory of Institutional Quality

This paper illustrates a theory of the second best where the constraints to the achievement of the optimum are of institutional nature. We consider the effects of corruption and bad governance on the public decision to privatize the provision of a service when contracts are incomplete and there is asymmetric information. We show that both corruption and bad governance are detrimental to welfare, but that removing only one of the two is not necessarily beneficial if the other is still present. The theory supplies a possible explanation to the controversial empirical evidence on the economic effects of corruption

Personalty interests at the Constitutional Convention: new tests of the Beard thesis.

Charles Beard ([1913] 2004) argued that the U.S. Constitution was created to advance the interests of people who owned personalty, particularly those at the Constitutional Convention. Because delegate votes on individual clauses at the Constitutional Convention were not publicly recorded, prior empirical analyses have been limited to inferred votes on a specific set of unrelated clauses. We extend this inquiry by inferring votes related to currency and debt issues which Beard put forth as the prime issues for those who owned personalty. Our analysis on these votes generates little support for a narrow version of the Beard thesis, which states that all personalty groups voted in a unified coalition at the Convention and supported the Constitution. Our analysis provides some support, however, for a broader interpretation that personalty and realty interests affected delegate voting behavior at the margin.US Constitution, Constitutional Convention, Money creation, Debt, Fiscal federalism

Economic freedom, civil liberties, political rights and growth: a causality analysis

Economic freedom, Civil liberties, Political rights, Economic growth, O10, O17, O50,