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Budget conditionality has become a key issue in the ongoing debate on the next multiannual financial framework. Some regard it as the EU's silver bullet against member states that refuse to implement EU values, rules and decisions. Others fear excessive interference in national competences. In this policy paper, Jörg Haas and Pola Schneemelcher examine what conditionality means in the EU context and whether it really improves the enforceability of EU rules and values.
Exports vs. investment: How political discourse shapes popular support for external imbalances
(2021)
The economic imbalances that characterize the world economy have unequally distributed costs and benefits. That raises the question of how countries could run long-term external surpluses and deficits without significant opposition against the policies that generate them. We show that political discourse helps to secure public support for these policies and the resulting economic outcomes. First, a content analysis of 32 000 newspaper articles finds that the dominant interpretations of current account balances in Australia and Germany concur with very distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Second, survey experiments in both countries suggest that exposure to these diverging interpretations has a causal effect on citizens’ support for their country’s economic strategy. Political discourse, thus, is crucial to provide the societal foundation of national growth strategies.
This dissertation asks three interrelated questions about economic policy coordination: (1) Why do we see persistent macroeconomic imbalances that make international coordination necessary? (2) What kind of economic policies does the European Union promote in its member states via its coordination framework, the European Semester? (3) What determines whether governments implement recommendations issued under the Semester?
The first paper argues that economic ideas, and their emphasis in media reporting, help secure public support for policies that result in external imbalances. It finds that the dominant interpretations of current account balances in Australia and Germany concur with distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Survey experiments in both countries suggest that exposure to these diverging interpretations of the current account has a causal effect on citizens’ support for their country’s economic strategy.
The second and third papers analyse policy recommendations under the European Semester, arguably the most ambitious example of economic policy coordination worldwide. The findings show that the European Union does not use the Semester to promote a single economic model across all member states. Recommendations do not uniformly recommend more reliance on the market or the state. Rather, they tend to suggest fiscal restraint and less protection for labour market insiders, while simultaneously promoting measures that benefit vulnerable groups in society. During the second decade of EMU, recommendations have gradually become more favourable of state intervention.
The fourth paper investigates possible reasons for (non-)compliance with the Semester. It argues that recommendations are more likely to be implemented when their policy direction is in line with national governments’ economic ideology. The analysis shows that recommendations advocating less state intervention in the economy are more likely to be implemented under right-wing governments.
Hohe Staatsschulden haben sich in der Eurozone zu einem veritablen Problem entwickelt. Dies betrifft nicht nur einzelne Staaten: Die europäische Schuldenkrise hat gezeigt, dass die Schwierigkeiten eines Eurolandes auf die gesamte Währungsunion übergreifen können. Welche Strategien zum Abbau von Staatsschulden werden diskutiert? Hilft eine stärkere Rolle der EU dabei, Schulden langfristig abzubauen oder sollte dies allein den Nationalstaaten überlassen werden?
Der Euro sieht für seine Mitglieder keine Austrittsoption vor. Einerseits schützt das die gemeinsame Währung vor spekulativen Angriffen. Andererseits hat die Eurokrise gezeigt, wie schwer es den Euroländern fällt, wirtschafts- und finanzpolitische Konflikte konstruktiv untereinander zu lösen. Warum wurde der Euro als Einbahnstraße entworfen? Was wären die Folgen einer Austrittsoption? Und welche Alternativen gibt es zu einem Austritt?
Die Währungsunion steckt in einer historischen Krise. Die dramatischen Verhandlungen mit Griechenland in den letzten Monaten haben die Schwächen des Euroraums deutlich in Erinnerung gerufen. Die meisten Kommentatoren sind sich einig: Damit die Währungsunion langfristig krisenfest und stabil wird, muss sie in entscheidenden Punkten reformiert werden. Wenig Einigkeit herrscht jedoch über das »Was« und »Wie«. Vor allem um weitere Integrationsschritte in der Fiskalpolitik wird derzeit heftig gestritten. Dieser Beitrag argumentiert, dass eine Fiskalunion nur dann stabilisieren kann, wenn sie sowohl glaubwürdige Haushaltsregeln als auch Elemente der Teilung von Risiko umfasst. Sie ist ein wichtiges Mittel zur wirksamen Stärkung der Eurozone, darf aber nicht das einzige bleiben. Ein strukturierter Verhandlungsprozess ist nun nötig, um ein tragbares Reformpakt zu schnüren und zwischenstaatliches Misstrauen zu überwinden.
This note assesses possible consequences of Brexit for the EU budget and the Common Agricultural Policy. It discusses the importance of the ‘Brexitbill’ and the loss of the British net contribution. Furthermore, it describes how the EU budget and spending on the Common Agricultural Policy can be adjusted to the new situation and estimates how the different options would affect EU Member States and their net balances.
The European Union (EU) – and its Economic and Monetary Union (EMU) in particular – is often criticized as a predominantly market-oriented project. We analyse to what extent such claims can be substantiated by focusing on one key aspect of the EU’s post-crisis framework for economic governance: the country-specific recommendations (CSRs) that the EU has been issuing annually since 2011. Based on an original dataset, we analyse more than 1300 CSRs, which show that the EU does not push uniformly for less state intervention. Rather, the CSRs tend to suggest fiscal restraint and less protection for labour market insiders, while simultaneously promoting measures that benefit vulnerable groups in society. During the second decade of EMU, CSRs have gradually become more permissive of higher public spending and more in favour of worker protection, while the share of recommendations advocating more social protection has stagnated at a high level.
Germany has been accused of transforming the EU into a “bad International Monetary Fund” by promoting conditionality and competitiveness. In a response to Hans Kundnani, Jörg Haas argues that insisting on rules and reforms is actually a constructive contribution to the debate about the EU’s future. The real issue with Germany is that it seems unwilling to comply with the laws it has shaped. This is part of a broader problem: the ever-growing influence of national governments in the EU makes it easy for powerful states to circumvent rules. We need an EU that ensures fair treatment for strong and weak members alike.