Judges as Fiscal Activists: Can Constitutional Review Shape Public Finance?

• Authors: Jarosław Kantorowicz
• Languages of publication: EN

Abstracts

EN

The judicialization of politics, or alternatively, politization of the judiciary has been much discussed over the last twenty years. Despite this, the way judges influence fiscal policy outcomes remains, to a large extent, unexplored. This paper attempts, at least partially, to fill this research gap. A judicial (constitutional) review constitutes the central element of the current analysis since it is considered as a key institutional device through which Constitutional (Supreme) Courts intervene in politics, including public finance. Specifically, this paper seeks to investigate empirically whether there is any systematic pattern according to which judges executing judicial review shape fiscal outcomes. The conceptual framework is based on the strategic interaction model and the assumption that the Constitutional Courts reflect public opinion (i.e. the Court as a majoritarian institution). Some preliminary results for a panel of 24 EU countries in the period 1995–2005 suggest that a strong judicial review correlates with a smaller size of government, measured as government income to GDP.

Keywords

EN

Public Finance; Size of Government; Constitutional Court; Judicial Review

• Publisher: Sciendo
• Journal: DANUBE: Law and Economics Review
• Year: 2014
• Volume: 5
• Issue: 2
• Pages: 79-104

Dates

online

2014-07-08

Contributors

author

Jarosław Kantorowicz

• European Doctorate of Law and Economics (EDLE). The University of Hamburg, Institute of Law and Economics, Johnsallee 35, D-20148 Hamburg, Germany

References

• Aaken, v. A., Feld, L., Voigt, S. (2010). DoIndependent Prosecutors Deter Political Corruption? An Empirical Evaluation across Seventy-eight Countries. American Law and Economics Review, 12(1), 204–244.
• Afonso, A., Furceri, D. (2010). Government size, composition, volatility and economic growth. European Journal of Political Economy, 26(4), 517–532.[Crossref]
• Alesina, A., Perottti, R., Tavares, J. (1998). The Political Economy of Fiscal Adjustments. Brookings Papers on Economic Activity, 1, 197–248.[Crossref]
• Alesina, A., Carloni, D., Lecce, G. (2011). The Electoral Consequences of Large Fiscal Adjustments. NBER Working Paper, 17655.
• Angrist, J., Pischke, J.-S. (2009). Mostly Harmless Econometrics. An Empiricist’s Companion. Princeton University Press.
• Bergh, A., Karlsson, M. (2010). Government size and growth: Accounting for economic freedom and globalization. Public Choice, 142, 195–213.[Crossref]
• Bossuyt, M. (2008). The Belgian Constitutional Court and the re-enacting of an annulled law. International Almanac Constitutional Justice in the New Millennium, 200–217.
• Brender, A. (2003). The Effect of Fiscal Performance on Local Government Election Results in Israel: 1989–1998. Journal of Public Economics, 87, 2187–2205.
• Caldeira, G. (1987). Public Opinion and The U.S. Supreme Court: FDR’s Court-Packing Plan. The American Political Science Review, 81(4), 1139–1153.[Crossref]
• Cárdenas, M., Mejía, C., Olivera, M. (2009). Changes in Fiscal Outcomes in Colombia: The Role of the Budget Process. In Hellerberg Mark, Scartascini Carlos and Stein Ernesto (eds.). Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America. Inter-American Development Bank.
• Casillas, Ch., Enns, P., Wohlfarth, P. (2011). How Public Opinion Constrains the U.S. Supreme Court. American Journal of Political Science, 55(1), 74–88.[Crossref]
• Conseil, F. (2000). Message sur le frein à l’endettement Le président de la Confédération Adolf Ogi et La chancelie`re de la Confédération Annemarie Huber-Hotz du 5 juillet 2000. 4295–4368.
• De Vries, C., Hobolt, S. (2012). Do Voters Blame Governments for Social Spending Cuts? Evidence from a Natural Experiment. http://www.sociology.ox.ac.uk/documents/epop/pa-pers/DeVriesHobolt EPOP2012.pdf (accessed on October 24, 2012).
• Deener, D. (1952). Judicial Review in Modern Constitutional Systems. The American Political Science Review, 46(4), 1079–1099.[Crossref]
• Dotan, Y. (1998). Judicial Review and Political Accountability: The Case of the High Court of Justice in Israel. Israel Law Review, 32(3), 448–474.
• Eslava, M. (2006). The Political Economy of Fiscal Policy: Survey. Inter-American Development Bank. Working Paper 583.
• Eurobarometer (1998). Citizens and health systems: main results from a Eurobarometer survey. Employment & social affairs.
• Eurobarometer (2009). Intergenerational solidarity. Analytical report. Flash Eurobarometer 269 – The Gallup Organisation.
• Fallon, R. (2008). The Core of an Uneasy Case for Judicial Review. Harvard Law Review, 121(7), 1693–1736.
• Feld, L., Voigt, S. (2003). Economic Growth and Judicial Independence: Cross Country Evidence Using a New Set of Indicators. European Journal of Political Economy, 19(3), 497–527.[Crossref]
• Feld, L., Voigt, S. (2006). Judicial Independence and Economic Growth: Some Proposals Regarding the Judiciary. In Congleton Roger and Swedenborg Birgitta (eds.). Democratic Constitutional Design and Public Policy, Analysis and Evidence. Cambridge: MIT Press, 251–288.
• Flemming, R., Wood, D. (1997). The Public and the Supreme Court: Individual Justice Responsiveness to American Policy Moods. American Journal of Political Science, 41(2), 468–498.[Crossref]
• Forum of Federations (2012). Federalism by Country. http://www.forumfed.org/en/federa-lism/federalismbycountry.php (accessed on October 30, 2012).
• Friedman, B. (2005). The Politics of Judicial Review. Texas Law Review, 84(2), 257–337.
• Garlicki, L. (2007). Constitutional courts versus supreme courts. International Journal Constitutional Law, 5(1), 44–68.[Crossref]
• Garoupa, N. (2011). Empirical Legal Studies and Constitutional Courts. Indian Journal of Constitutional Law, 5(1), 25–64.
• Garoupa, N., Ginsburg, T. (2012). Building Reputation in Constitutional Courts: Party and Judicial Politics. Arizona Journal of International and Comparative Law, 28(3), 539–568.
• Gely, R., Spiller, P. (1990). A Rational Choice Theory of Supreme Court Statutory Decisions with Applications to the State Farm and Grove City Cases. Journal of Law, Economics, and Organization, 6(2), 263–300.
• Gely, R., Spiller, P. (1992). The Political Economy of Supreme Court Constitutional Decisions: The Case of Roosevelt’s Court-Packing Plan. International Review of Law and Economics, 12, 45–67.[Crossref]
• Giles, M., Blackstone, B., Vining, R. (2008). The Supreme Court in American Democracy: Unraveling the Linkages between Public Opinion and Judicial Decision Making. Journal of Politics, 70(2), 293–306.
• Ginsburg, T. (2006). Economic Analysis and the Design of Constitutional Courts. Theoretical Inquiries in Law, 3,1.
• Ginsburg, T. (2008). The Global Spread of Constitutional Review. In Whittington Keith, Kelemen Daniel, Caldeira Gregory (eds.). Oxford Handbook of Law and Politics, 81.
• Ginsburg, T., Elkins, Z. (2009). Ancillary Powers of Constitutional Courts. University of Texas Law Review, 87, 1430–1461.
• Golder, M. (2000). Democratic Electoral Systems around the World, 1946–2000. Retrieved from https://files.nyu.edu/mrg217/public/elections.html (accessedon November 17, 2012).
• Gutmann, J., Hayo, B., Voigt, S. (2011). Determinants of Constitutionally Safeguarded Judicial Review – Insights Based on a New Indicator. Working Paper. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1947244 (accessed on October 23, 2012).
• Gwartney, J., Lawson, R., Hall, J. (2012). Economic Freedom of the World: 2012 Annual Report. Fraser Institute.
• Von Hagen, J. (1992). Budgeting Procedures and Fiscal Performance in the European Communities. Commission of the European Communities. DG ECFIN. European Economy Paper No. 96.
• Hansen, J.M. (1998). Individuals, Institutions, and Public Preferences over Public Finance. American Political Science Review, 92(3), 513–531.[Crossref]
• Hayo, B., Voigt, S. (2007). Explainingde facto judicial independence. International Review of Law and Economics, 27, 269–290.[Crossref]
• Henisz, W. (2000). The Institutional Environment for Economic Growth. Economics and Politics, 12(1), 1–31.
• Jolls, Ch., Sunstein, C., Thaler, R. (1998). A Behavioral Approach to Law and Economics. Stanford Law Review, 50, 1471–1547.[Crossref]
• Kelsen, H. (1942). Judicial Review of Legislation. The Journal of Politics, 4(2), 183–200.[Crossref]
• Kirchgässner, G. (2005). Sustainable Fiscal Policy in a Federal State: The Swiss Example. Swiss Political Science Review, 11(4), 19–46.[Crossref]
• Landes, W., Posner R. (1975). The Independent Judiciary in an Interest-Group Perspective. Journal of Law and Economics, 18(3). Economic Analysis of Political Behavior: Universities-National Bureau Conference Series Number 29. 875–901.
• Link, M. (1995). Tracking Public Mood in the Supreme Court: Cross-Time Analyses of Criminal Procedure and Civil Rights Cases. Political Research Quarterly, 48(1), 61–78.[Crossref]
• McGuire, K., Stimson, J. (2004). The Least Dangerous Branch Revisited: New Evidence on Supreme Court Responsiveness to Public Preferences. The Journal of Politics, 66(4), 1018–1035.
• Mehrhoff, J. (2009). A solution to the problem of too many instruments in dynamic panel data GMM. Deutsche Bundesbank. Discussion Paper Series 1: Economic Studies. No 31.
• Mishler, W., Sheehan, R. (1993). The Supreme Court as a Countermajoritarian Institution? The Impact of Public Opinion on Supreme Court Decisions. The American Political Science Review, 87(1), 87–101.[Crossref]
• Mishler, W., Sheehan, R. (1994). Popular Influence on Supreme Court Decisions. The American Political Science Review, 88(3), 716–24.
• Mishler, W., Sheehan, R. (1996). Public Opinion, the Attitudinal Model, and Supreme CourtDecision Making: AMicro-Analytic Perspective. Journal of Politics, 58(1), 169–200.[Crossref]
• Mueller, D. (2003). Public Choice III. Cambridge University Press.
• Mukherjee, B. (2003). Political Parties and the Size of Government in Multiparty Legislatures. Examining Cross-Country and Panel Data Evidence. Comparative Political Studies, 36(6), 699–728.[Crossref]
• Nannestad, P. (2008). What Have We Learned About Generalized Trust, If Anything? Annual Review of Political Science, 11, 413–437.[Crossref]
• Padovano, F., Sgarra, G., Fiorino, N. (2003). Judicial Branch, Checks and Balances and Political Accountability. Constitutional Political Economy, 14, 47–79.
• Peltzman, S. (1992). Voters as Fiscal Conservatives. The Quarterly Journal of Economics, 107(2), 327–361.[Crossref]
• Persson, T., Tabellini, G. (2003). Economic Effects of Constitutions. Cambridge: MIT Press.
• Persson, T., Tabellini, G. (2004). Constitutional Rules and Fiscal Policy Outcomes. The American Economic Review, 94(1), 25–45.[Crossref]
• Pommerehne, W., Schneider, F. (1978). Fiscal Illusion, Political Institutions, and Local Public Spending. Kyklos, 31(3), 381–408.[Crossref]
• Posner, R. (2008). How Judges Think. Harvard University Press.
• Prohl, S., Schneider, F. (2009). Does Decentralization Reduce Government Size? A Qualitative Study of the Decentralization Hypothesis. Public Finance Review, 37(6), 639–664.[Crossref]
• Raudla, R. (2010). Constitution, Public Finance, and Transition. Theoretical Developments in Constitutional Public Finance and the Case of Estonia. Finanzsoziologie 4, Frankfurt am Main: Peter Lang.
• Raudla, R. (2011). Effects of a Constitution on Taxation: The Role of Constitutional Review in the Development of Tax Laws in Estonia. Halduskultuur – Administrative Culture, 12(1), 76–105.
• Romero-Àvila, D., Strauch, R. (2008). Public finances and long-term growth in Europe: Evidence from a panel data analysis. European Journal of Political Economy, 24(1), 172–191.[Crossref]
• Roodman, D. (2006). How to Do xtabond2: An Introduction to “Difference” and “System” GMM in Stata. Center for Global Development. Working Paper Number 103.
• Roodman, D. (2009). Practitioners’ Corner. A Note on the Theme of Too Many Instruments. Oxford Bulletin of Economics and Statistics, 71(1).[Crossref]
• Sadurski, W. (2002). Constitutional Justice, East and West. Democratic Legitimacy and Constitutional Courts in Post-Communist Europe in A Comparative Perspective. Kluwer Law International.
• Schauer, F. (2012). The Political Risks (if any) of Breaking the Law. Journal of Legal Analysis, 4(1), 83–101.
• Schäfer, H.-B., Ott, C. (2004). The Economic Analysis of Civil Law. Edward Elgar Publishing.
• Schuknecht, L. (1994). Political Business Cycles and Expenditure Policies in Developing Countries. IMF Working Paper 121.
• Schwartz, H. (2002). The struggle for constitutional justice in post-communist Europe. Chicago: University of Chicago Press.
• Segal, J., Spaeth, H. (2002). The Supreme Court and the Attitudinal Model Revisited. Cambridge University Press.
• Soto, M. (2009). System GMM estimation with a small sample. Barcelona Economics Working Paper Series Working Paper no. 395.
• Stimson, J., MacKuen, M., Erikson, R. (1995). Dynamic Representation. American Political Science Review, 89(3), 543–65.[Crossref]
• Stone, A. (1995). Coordinate Construction in France and Germany. In Tate Neal and Vallinder Torbjörn (eds.). The Global Expansion of Judicial Power. New York University Press: New York, London. 205–229.
• Stone Sweet, A. (2000). Governing with Judges. Constitutional Politics in Europe. Oxford University Press.
• Stone Sweet, A. (2007). The politics of constitutional review in France and Europe. International Journal of Constitutional Review, 5(1), 69–92.
• Tonelson, A. (2002). The Race to the Bottom. Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards. Boulder: Westview Press.
• Tridimas, G. (2005). Judges and Taxes: Judicial review, judicial independence and the size of government. Constitutional Political Economy, 16, 5–30.
• Trybunał K. (2003). Prawo podatkowe w świetle orzecznictwa Trybunału Konstytucyjnego w 2002 r. Wydawnictwo Trybunału Konstytucyjnego. 15–27.
• Tsebelis, G. (2002). Veto Players: How Political Institutions Work. Princeton University Press.
• Tushnet, M. (2010). How Different are Waldron’s and Fallon’s Core Cases for and against Judicial Review? Oxford Journal of Legal Studies, 30(1), 49–70.[Crossref]
• Ura, J., Wohlfarth, P. (2010). “An Appeal to the People”: Public Opinion and Congressional Support for the Supreme Court. The Journal of Politics, 72(4), 939–956.[Crossref]
• Vallinder, T. (1995). When the Courts Go Marching In. In Tate Neal and Vallinder Torbjörn (eds.). The Global Expansion of Judicial Power. New York University Press: New York, London. 13–26.
• Vanberg, G. (2005). The Politics of Constitutional Review in Germany. Cambridge: Cambridge University Press.
• Vaubel, R. (1996). Constitutional Safeguards Against Centralization in Federal States: An International Cross-Section Analysis. Constitutional Political Economy, 7, 79–102.
• Vaubel, R. (2009). Constitutional courts as promoters of political centralization: lessons for the European Court of Justice. European Journal of Law and Economics, 28, 203–222.[Crossref]
• Volcansek, M. (2000). Constitutional Politics in Italy: The Constitutional Court. Houndsmills, Basingstoke, UK: Macmillan Press and New York: St. Martin’s Press.
• Volcansek, M. (2001). Constitutional courts as veto players: Divorce and decrees in Italy. European Journal of Political Research, 39, 347–372.[Crossref]
• Wagner, R. (1976). Revenue Structure, Fiscal Illusion, and Budgetary Choice. Public Choice, 25, 45–61.[Crossref]
• Waldron, J. (2006). The Core of the Case Against Judicial Review. The Yale Law Review, 115, 1346–1406.
• Welch, S. (1985). The “More for Less” Paradox: Public Attitudes on Taxing and Spending. Public Opinion Quarterly, 46(3).[Crossref]
• Wittrup, J. (2010). Budgeting in the Era of Judicial Independence. International Journal For Court Administration. April.
• Wooldridge, J. (2009). Introductory Econometrics: A Modern Approach. South-Western Cengage Learning.

Identifiers

DOI

10.2478/danb-2014-0005