Credibly Committing to Property Rights: The Roles of Precedent and the Constitution.

Melton, James Credibly Committing to Property Rights: The Roles of Precedent and the Constitution. Working Paper (Unpublished)

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Abstract

In cross-national studies, scholars typically ignore the moderating effect of credibility on the relationship between property rights protection and economic growth. However, both theory and case evidence suggest that credibility is necessary for this relationship to exist. Using panel data spanning more than 100 countries from 1985-2005, this paper investigates if two credibility mechanisms - precedent and the constitution - moderate the relationship between property rights protection and economic growth. The findings suggest that a credible commitment to property rights protection is a necessary condition for such protection to enhance economic performance. The implications of these findings are twofold: 1) property rights reforms are unlikely to be successful in countries that cannot credibly commit to those reforms, and 2) unsuccessful property rights reforms at present may reduce the likelihood that future reforms will be successful.

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