Credible Commitment in the United States: Structural and Substantive Limits on the Avoidance of Public Debt

Abstract

"Institution s are crucial to economic growth. Institutions that create the right incentives, that create confidence in the economic system, that allow business to achieve productive efficiencies and to realize the gains from trade, all make the chance of economic growth more likely. Institutions that do otherwise make economic growth very difficult. Institutions come in many forms and arise from different sources -- for example, standards of behavior established by religion , ideology or culture ; or customs developed by firms interacting in the same industry. Over the centuries of our country's existence, the law has been one of the most important institution s advancing economic growth. A small, but important, part of that success comes from the law's role in creating confidence in government debt."