DP4808 Bundling and the Unanimity Rule

Author(s): Ulrich Erlenmaier, Hans Gersbach
Publication Date: December 2004
Keyword(s): amendment rules, bundling, constitutions, provision of public projects, unanimity rule
JEL(s): D62, D70, H40
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4808

In this Paper, we design democratic constitutions that can transcend the shortcomings of the unanimity rule. The constitution embeds the unanimity rule in a set of virtue-supporting principles: (a) broad packages with many public projects (bundling) are allowed, but can only be proposed once in a legislative term; (b) the person who designs the package is also taxed at the highest proposed rate; and (c) subsidies are forbidden. We show that such democratic constitutions can yield efficient public project provision.