Economic Approaches to the Separation of Powers

Jerg Gutmann and Stefan Voigt

No 87, ILE Working Paper Series from University of Hamburg, Institute of Law and Economics

Abstract: This chapter surveys economic perspectives on the separation of powers, revealing how contemporary research in political economics and the economic analysis of law conceptualize and assess institutional checks on government authority. Emphasizing principal-agent theory, it unpacks how constitutional structures-ranging from presidentialism and bicameralism to federalism-help align the interests of political agents with those of citizens and mitigate moral hazard. The analysis extends to the judiciary's role as a credible commitment device, highlighting empirical evidence on the economic significance of judicial independence. Moving beyond the traditional tripartite model, the chapter explores the rationale and effects of delegating authority to independent agencies and so-called fourth branch agencies such as audit offices and anti-corruption commissions. The chapter concludes by addressing the resilience of separation-of-powers systems in the face of democratic erosion and the idea of militant constitutionalism. It argues that the economic approach offers helpful tools for understanding both the potential and limitations of institutional design in promoting accountable, stable, and adaptive governance, while underscoring the need for further research into how separation of powers can be fortified against contemporary authoritarian threats.

Keywords: Political economy; judicial independence; independent agencies; fourth branch agencies; militant constitutionalism (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-law and nep-pke
Note: Contribution prepared for the "Cambridge Handbook on Separation of Powers"
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ilewps:87

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