Beyond Conditionality: Policy Reversals in Southern Europe in the Aftermath of the Eurozone Crisis

Moury, Catherine; Afonso, Alexandre

doi:10.1080/13608746.2019.1641945

Cited by 17 publications

(14 citation statements)

References 58 publications

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“…This new reform pattern sprang from the pressure exerted by financial markets and international actors (IMF, European Commission) which urged governments to neglect vote‐seeking objectives within the well‐known credit‐claiming/blame‐avoidance framework for the sake of attaining short‐term savings on public expenditure (Bonoli, 2012). However, when the policy space for domestic actors again expanded, the then incumbent governments in several Southern European countries considered the past reforms partly as having “gone too far”, reversed or at least attenuated them, and attempted to claim credit for the “benefaction” (Branco, Cardoso, Guillen, Sacchi, & Balbona, 2019; Moury & Afonso, 2019). 12…”

Section: What Are the Trends And Commonalities Of Pension Reform Polimentioning

confidence: 99%

Recent pension reforms in Europe: More challenges, new directions. An overview

Hinrichs

2021

Soc Policy Adm

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During the last 30 years, all European Union member states have reformed their pension systems. In view of ongoing and intensifying population aging, efforts have aimed at containing the future rise of the contribution rate, improving the system dependency ratio, lowering the benefit ratio and/or infusing tax money or other financial resources into the system. Moreover, since about the early 2000s, we can observe a move towards a multi‐pillar pension system in countries hitherto running a dominant‐pillar system: private pre‐funded occupational pensions and individual provision for old age are given larger roles within the public–private mix of retirement income. An analysis of reforms shows a finite menu of adjustment options, and concrete measures have to be adapted to nation‐specific institutional contexts. Finally, we can conclude that pension reforms focusing on long‐term financial sustainability may increase the risk of old‐age poverty and, thus, violate a central objective of pension schemes.

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Section: What Are the Trends And Commonalities Of Pension Reform Polimentioning

confidence: 99%

Recent pension reforms in Europe: More challenges, new directions. An overview

Hinrichs

2021

Soc Policy Adm

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“…This creates the problem of lack of democratic ownership of the imposed economic reforms (Featherstone, 2016) and leaves pro‐reform positions politically weak. Ultimately, it may lead to reform reversals (Moury and Afonso, 2019), deepen intra‐country divisions regarding support for the EMU (Fernández‐Albertos and Kuo, 2016) or generate political instability and reform‐driven Euroscepticism and populism (Armingeon et al, 2016; Keith, 2017; Vasilopoulou, 2018).…”

Section: Discussionmentioning

confidence: 99%

The Political Value of Internal Devaluation in the Euro Area Crisis

Xifré

2020

Global Policy

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To overcome the euro area (EA) crisis, the core pushed the periphery to cut labour costs. However, this paper documents that internal devaluation (ID) only mildly improves exports and it can significantly harm firms' non-price competitiveness factors. This raises the question of whether ID entered the bail-out conditionality only for economic reasons or also with political motivations. We argue that the economic crisis reignited a trust-confidence crisis between the core and periphery countries, with the latter emerging as non-credible reformers. While some adjustment to regain competitiveness was necessary in the periphery, it is hard to conceive that the policy mix adopted was the outcome of taking all costs into account. Political reasons appear to have exerted a notable influence and this may undermine the effectiveness, ownership and sustainability of present and future reforms. Policy implications • Policy responses to recover competitiveness in the euro area by recommending the periphery engage in strong forms of internal devaluation are suggestive of political motivations by the core. Crisis resolution plans involving the core-periphery divide will be unavoidably politically charged, but crisis management should put careful analysis ahead of ideology and combine internal devaluation with the appropriate fiscal and monetary policies. • The economic crisis that started in 2008 reignited another crisis: a core-periphery trust-confidence crisis, as the periphery governments emerged from the crisis as non-credible reformers during the first years of the EMU. Any successful attempt to reform the economic governance of the EA and the EU requires that the periphery first improves their credibility by adopting genuine reforms. • Under this proviso, a smart policy to facilitate the economic convergence across the EA and the EU and to sustain political stability in the region would be to emphasise the importance of structural reforms aimed not only at moderating wages, but also enhancing 'non-price/cost' factors, such as investing in innovation capacity and the education system, and improving the quality of institutions.

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“…On the one hand, they need to satisfy their voters by implementing such a platform. On the other, they have strong incentives to appear credible to investors and respect their international commitments (Moury & Afonso 2019); achieving such goals allows more influence to be gained internationally and/or money to be saved on high interest rates and, in the eurozone, pecuniary sanctions to be avoided. In Peter Mair's eloquent words, governing parties need to be both 'responsive and responsible' (Mair 2009).…”

Section: Austerity By Stealthmentioning

confidence: 99%

“…Finally, scholars concerned with the consequences of a bailout for public policy also present interesting findings for our argument. The idea is that spending reversals have costs (lack of budgetary revenues, damaged credibility or EU sanctions) and governments are more likely to reverse policies when this brings an electoral payoff (Moury & Afonso 2019). In this line, Rickard and Caraway (2019) demonstrate that public sector wage cuts made under IMF conditionality do not persist in the longer term because governments are keen to appease powerful domestic constituents.…”

Section: Austerity By Stealthmentioning

confidence: 99%

How to Combine Public Spending with Fiscal Rigour? ‘Austerity by Stealth’ in Post-Bailout Portugal (2015-2019)

Moury¹,

Giorgi²,

Barros³

2020

South European Society and Politics

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In this article, we argue that the Costa I Socialist government (2015-2019) managed to combine responsiveness to voters with responsibility towards domestic and international actors by pursuing some kind of 'austerity by stealth', which we define as less visible fiscal contraction that is not displayed by the government in its public discourse. The radical left parties implicitly agreed with this strategy in exchange for the adoption of a long list of visible anti-austerity policies. This allowed the Costa I government to fulfil its electoral pledges and maintain the support of the radical left on the one hand, whilst also reducing the country's deficit and consequently the costs of interest-debt repayments.

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Beyond Conditionality: Policy Reversals in Southern Europe in the Aftermath of the Eurozone Crisis

Cited by 17 publications

References 58 publications

Recent pension reforms in Europe: More challenges, new directions. An overview

Recent pension reforms in Europe: More challenges, new directions. An overview

The Political Value of Internal Devaluation in the Euro Area Crisis

How to Combine Public Spending with Fiscal Rigour? ‘Austerity by Stealth’ in Post-Bailout Portugal (2015-2019)

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