The IMF, the eurozone and global financial crises, and the politics of economic ideas

The IMF’s 2010 Troika lending programme with Greece was unprecedented due to the IMF’s controversial internal rule changes, the programme’s pivotal effects on eurozone crisis policies and the effect of austerity concepts on Greece. We aim to explain conclusively why the IMF lent to Greece without restructuring, as previous explanations have crucial gaps. We operationalise Ben Clift’s theory of IMF behaviour in process-tracing, analysing programme-related text sources. Our exercise is novel as Clift does not aim to explain individual programmes, while the theory warrants further testing. According to our causal mechanism, the IMF used two key analytical lenses formed via bricolage, fiscal space and nonlinear multiple equilibria processes (NLMEP), to analyse the programme context and formulate the programme design. While we find our mechanism too narrow to explain the programme design, our results regarding the role of NLMEP and fiscal space within IMF programme-time economic analysis support the importance of financial contagion as a motivator for monetarily significant IMF participation and why the IMF adhered to austerity despite risking debt stabilisation. However, it seems limitedly useful to assume coherent ideational drivers behind the precise programme design: instead, accepting the key role of ad hoc judgement depicts IMF behaviour accurately.

Section: Discussionmentioning

confidence: 99%

Explaining IMF design of 2010 Greece loan: bricoleurs relying on fiscal space and nonlinear multiple equilibria processes

Nordström

Laiho²

2022

“…ECB austerity prescriptions were also part of a wider authority context over the construction of economic rectitude, as ECB leadership often took issue with policy ideas pursued by the IMF (Farrell and Quiggin 2017 ; Clift 2018 , 2020 ). Replying to Fund’s concerns that fiscal consolidation would hurt economic recovery (IMF 2011 ), the ECB (Trichet 2010a , 2011b ; ECB 2011 ) kept urging Western governments to ‘stimulate no more’ as it was ‘time for all to tighten’ (Trichet 2010b ).…”

Section: The Evolution Of Ecb’s Fiscal Thinking: From ‘Paradigm Man’ ...mentioning

confidence: 99%

The politics of ECB’s economic ideas and its implications for European economic governance: embedding a resilient EMU from the top-down?

Mugnai

2022

By focusing on ECB’s economic policy thinking and its internal politics of ideas, this research aims to provide two contributions to knowledge. Firstly, it seeks to enhance scholarly understanding of ideational change inside international organisations (IOs). To do so, it asks (a) how ECB’s economic policy thinking has evolved since the outbreak of the euro crisis, and (b) what drives change in ECB’s ideas on the best way to deepen Europe’s Economic and Monetary Union (EMU) in its fiscal and economic realms. To answer these questions, fiscal policy, structural reforms and convergence towards resilient economic structures are used as case studies. The article argues that the interplay between changes in ECB’s leadership and internal policy discussions promoted by ideational entrepreneurs played a pivotal role in enabling new ideas to emerge inside the Bank. Secondly, by interrogating ECB’s ideas on the way to complete EMU, this research reflects on the future of the euro. It shares the view that the construction of cognitive authority within IOs is an ongoing political struggle over the ideas underpinning the everyday practice of global governance. By looking at the politics of ideas within the ECB, this article aims to contribute to the international political economy of EMU deepening.

The hollowing out of monetarism: the rise of rules-based monetary policy-making in the UK and USA and problems with the paradigm change framework

Clift

2019

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