No abstract

The Lisbon Strategy supports reform of Member States' tax‐benefit systems while the ‘fiscal philosophy’ of the EMU postulates that governments should allow only automatic stabilizers, built into tax‐benefit systems, to smooth aggregate income. We ask whether these two pillars of EU economic governance are compatible. By exploring how structural reforms affect fiscal stabilization, we complement a political economy literature that asks whether fiscal consolidation fosters or hinders structural reforms. Using EUROMOD, a tax‐benefit model for the EU‐15, we identify the connections between specific tax and benefit reforms and the size of the stabilizers. We conclude that Lisbon‐type reforms may worsen the stabilizing capacity of tax‐benefit systems.

The crisis of 2007-09 was prefigured by bubbles in the housing and mortgage credit markets of major Organisation for Economic Co-operation and Development (OECD) countries. A comparison of the United States, the United Kingdom, and France reveals that, contrary to popular perception, the two European countries had a bigger housing price bubble, more volatility, and a more short-termist mortgage market. Yet, the fallout of the crisis—in terms of overindebtedness of mortgage holders, foreclosures of homes, and the extent to which the “nest-eggs” of households were devalued—has been worse in the United States. This article explores which differences in the use of credit markets for the social policy of promoting homeownership can account for this puzzling finding.

Successive crises in the European Union have led critics to identify a pervasive tendency to emergency politics, where democratic deliberation gives way to policy decisions forced through by executive authority. By contrast, in this article it is argued that crises may stimulate deliberation and compromise, even when preceded by open conflict and an evident collective action failure. Drawing on a new dataset of 1759 policy-related actions covering the EU and its member states' responses to COVID-19 between March and July 2020, the timing, sequencing and origins of policy claims and steps are traced. Both urgent epidemiological responses are found, where emergency measures were in evidence; and responses to anticipated economic challenges that had to overcome disagreement concerning necessary institutional reforms. The findings depict a multifaceted crisis response. The European Commission acted swiftly but also bought time for member state governments to deliberate. This casts doubt on the many-crises-one-script account of EU emergency politics.

No abstract

No abstract

Abstract:For many political economists, the loss of monetary sovereignty is the major reason for why the Southern periphery fared so badly in the Euro area crisis. Monetary sovereignty here means the ability of the central bank to devalue the exchange rate or to buy government debt by printing the domestic currency. We explore this diagnosis by comparing three countries -Hungary, Latvia and Greece -that received considerable amounts of external assistance under different monetary regimes. The evidence does not suggest that monetary sovereignty helped Hungary and Latvia to stabilize their economies. Rather, cooperation and external assistance made foreign banks share in the costs of stabilization. By contrast, the provision of liquidity by the ECB inadvertently facilitated the reduction of foreign banks' exposure to Greece which left the Greek sovereign even more exposed. By viewing the Euro area as a monetary system rather than an incomplete state, we see that what is needed for Euro area stabilization is cooperation over banking union, rather than a fully-fledged federal budget.2

The Covid-19 pandemic could not have started worse for the EU (Herszenhorn and Wheaton, 2020). In late February 2020, Italy requested supplies of medical equipment from other member states under the EU's crisis response programme, the Civil Protection Mechanism. The Commission duly escalated it to highest alert. But there was no response. Alarmed by Italy's request, France engaged in a stock-taking exercise that did not allow trading. Czechia, Germany, and Poland introduced export controls for medical equipment. Embarrassingly, China, Cuba and Russia came to the rescue more readily than fellow-Europeans (Poggioli, 2020). Under pressure from the Commission, German controls were lifted soon after (Reuters, 2020), but support for EU membership in Italy plummeted. The prospects for collective, forward-looking crisis management were bleak. Considerable policy resources had been spent since 2008 and their replenishment did not look promising. Some interventions, especially of the Troika, had done lasting political damage. A deepening political crisis seemed imminent, dividing an already divided union even further.Yet, over several months, the EU managed to agree on a massive support package for the anticipated long slow recovery. The breakthrough came in mid-July. This was not a Hamiltonian Moment, founding the fiscal union that some see as the panacea for all Euro Area (EA) woes (Kaletsky, 2020). But the flagship Recovery and Resilience Facility (RRF) recognizes that a preventive fiscal capacity is required to shield and support the EA's most vulnerable members. This is in stark contrast to the European Stability Mechanism (ESM), which handed out cheap rescue loans only once a government was shut out of bond markets, and imposed intrusive prescriptions for fiscal policy and institutional reforms, overseen by the Troika. The RRF adopts the principle that the promise of mutual support can prevent a panic before it spreads. This subsequently changed the political economy of Covid-19, although the public relations debacle of the Commission's vaccine procurement and the slow roll-out of the immunization programme in member states continued to test political unity.