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Economic Effects of Post-Socialist Constitutions 25 Years from the Outset of Transition

The Constitutional Political Economy Approach


Katarzyna Metelska-Szaniawska

This book focuses on the nexus between constitutions adopted by post-socialist countries of Europe and Asia after 1989 and economic transition in the region. It takes the perspective of Constitutional Political Economy and argues for the role of constitutions as commitment-enhancing mechanisms for political decision makers in the field of post-socialist economic reforms. For the first time in economic studies of constitutions this book employs the synthetic control method – a novel empirical approach allowing to account for endogeneity and causality issues. The blend of theory (including evolutionary insights) and empirical results allows to formulate recommendations for constitution drafters, emphasizing the role of factual constitutional court independence for successful economic reforms.
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Chapter 4. The synthetic control approach to estimating economic effects of post-socialist constitutions


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Chapter 4.  The synthetic control approach to estimating economic effects of post-socialist constitutions

In response to the problems of endogeneity and causality in comparative studies with relatively small sample sizes, a new statistical approach has recently been developed, called the synthetic control method. In this chapter we apply this method to reassess the effect of constitution-making in post-socialist countries of Europe and Asia on performance of these countries in the field of economic reforms during the post-1989 transition. We verify the existence of such effects and evaluate their statistical significance. Then we search for the explanation of these effects and their magnitude focusing on the characteristics of these constitutions and the solutions that they envisage (structural provisions, bills of rights and enforcement mechanisms). Thanks to employing this approach we are able to avoid several technical caveats that have arisen in earlier studies and verify the validity of their conclusions. In addition, we obtain country-specific results for each individual post-socialist state, as well as formulate detailed insights regarding the actual mechanisms or channels of influence of the constitutional framework on economic reforms. We start by introducing the synthetic control method, its advantages and shortcomings, as well as the design of the study applying this method to re-assess the effects of adopting post-socialist constitutions on economic reforms in transition countries.

4.1  The synthetic control method

In this section we introduce the synthetic control method77 as a statistical approach allowing to study causal...

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