Economic Adjustment Programmes Research Articles

The impact of the Economic Adjustment Programme for Ireland: a synthetic control approach

We examine the effect of the Economic Adjustment Programme for Ireland on the country’s per capita income. We are the first to provide empirical analysis on the importance of the program to Irish economic recovery post-financial crisis. We employ the synthetic control approach with bias correction with World Bank Opendata and Irish Central Statistics Office data from 2000 to 2019. Our results indicate that the EAP had a positive and statistically significant impact on Ireland’s per capita income, with an average effect of 5,626.27 US$. These conclusions are robust to a placebo test and the Synthetic Difference in Difference estimator.

Fiscal Rules in the European Union: Less Is More

AbstractIn this article, we examine the non‐linear relationship between the number of fiscal rules in place and compliance with the European Union's (EU) numerical fiscal targets included in the Stability and Growth Pact (SGP). Using a sample composed of 27 EU Member States for a period spanning 2000 to 2021, we document that countries' compliance with fiscal rules is positively associated with the number of numerical fiscal targets. However, this association only holds up to a specific threshold. Once this threshold is achieved, the relationship becomes negative, implying that the multiplication of numerical fiscal rules may undermine compliance, thereby reducing their effectiveness. In addition, we find that general elections and frequent changes in government reduce compliance, whereas economic adjustment programmes contribute positively to countries' compliance with fiscal targets. The findings bear critical policy implications against the backdrop of the current review of the European fiscal framework.

The politics of structural reform in Ireland: Dominant growth coalitions, domestic business elites, and internal devaluation

This paper broadens the scope of the Growth Model (GM) research agenda beyond the study of ‘core’ business elites by investigating the influence of (oft-neglected) non-core business actors and sectoral interests in determining growth strategies. To do so it looks at a crucial case in the GM debate: Ireland. Ireland’s robust recovery from the eurozone crisis has set it apart from the rest of the eurozone periphery. For GM scholarship, Ireland’s recovery has been driven by its long-established multinational/export sector, which is relatively indifferent to the effects of austerity and internal devaluation. Why, then, was internal devaluation a central plank of Ireland’s crisis response and Economic Adjustment Programme (EAP)? Drawing on 10 original interviews with Irish business elites and policy makers and documentary evidence, this paper shows that domestic, not multinational, business elites played a key role in framing conditionality related to competitiveness and labour market reform in the Irish EAP. This challenges the concept of ‘dominant growth coalitions’ and argues that an exclusive focus on ‘core’ business elites neglects the ability of other fractions of business power to determine growth strategies. Looking beyond ‘core’ business elites makes it possible to identify transformation behind more obvious patterns of continuity.

Overdue taxdebt in Greece

Accumulation of overdue tax debts has been a thorn in the side of Greek fiscal policy in the past two decades. The dramatic accumulation of tax debts during the crisis of 2008 called for urgent reforms and measures to tackle the problem. Under the pressure of three Economic Adjustment Programmes, the MOU governments embarked on an effort to reform Greek Tax Administration, with emphasis on independence, depoliticization and wider digital transformation. This has been a slow process yet to be completed and the strains to the system introduced by the ongoing health crisis, make the need for reform even more urgent. The present paper puts overdue tax debts into perspective, analyzes the process of accumulation and brings out its main features, assesses the efficiency of Tax Administration and comes up with several policy recommendations. After we profile overdue debts stock and its characteristics, we compile an input-output table, which leads us to the composition of a series of indicators, which help assess the efficiency of tax administration in the context of the fiscal policies of the last two decades. The results of the research indicate poor quality of debts accumulated over time, as well as low efficiency of the Tax Administration, but with some improvement in recent years.

Are economic adjustment programmes implemented and are they resilient? An answer with the ‘ENAP’: a data base on EcoNomic Adjustment Policies in five Eurozone countries (2007–2020)

Between 2010 and 2019, five Eurozone governments in economic difficulty received assistance from international lenders on condition that certain policies specified in the Memoranda of Understanding (MoU) were implemented. To what extent were those conditions implemented? After conditionality, to what extent have governments rolled back changes pursued under external constraint? Do we find variation across governments regarding implementation and reversals, and if so, why?. This paper presents a database allowing the answers to those questions, the Data Base on EcoNomic Adjustment Policies (ENAP) database. We codified all policies and reforms included in the MoU’s, and whether those were subsequently fully or partially implemented. We also codified all decisions taken by bailed out countries since the beginning of the financial crisis and verified whether those had been kept or fully or partially reversed until December 2019. For each condition or policy, a series of explanatory variables were coded: policy sector, type of reform, timing and type of reversal, origin of reversal and number of veto players. The ENAP shows that in all countries, MoU’s were largely implemented and are resilient.

Business as usual? How the pharmaceutical industry protected its long-term interests during and after eurozone bailouts (2011–2020)

ABSTRACT In this article, we start from the assumption that the pharmaceutical industry accumulates material, instrumental, ideational and institutional power. Considering this, we expect that it would be very difficult for governments to reduce the rents of pharmaceutical companies in the long-term, even when the former are externally constrained to reduce their spending. We test our argument by carrying out a qualitative analysis of a paradigmatic case study, the Portuguese economic adjustment programme (2011–2014). We demonstrate that the conditionality associated with the international bailout was welcomed by Portuguese reformist ministers as an opportunity to decrease public pharmaceutical spending. However, the representatives of the industry took several initiatives to make sure that the decrease of its profits would be limited in scope and time. As a result, as soon as the bailout terminated, the industry was able to regain its rents.

The 2011-2014 Economic Adjustment Programme for Portugal

The 2007 global crisis triggered a severe sovereign debt crisis in Portugal, which led to the need to comply with an Economic Adjustment Programme (EAP) based, among other pillars, on fiscal consolidation. According to our literature review, the economic environment in which the adjustment occurs matters. Also, the composition of the adjustment seems to be relevant to its effectiveness, with expenditure-based plans being less contractionary (or even expansionary) than tax-based plans. Our purpose is to understand, through a VAR model, which could have been the Portuguese economic path without the EAP compared with the actual one. Our results suggest that the austerity programme may have been harmful for the economic activity in the short run, but in a longer horizon it produced a better outcome than the one without the EAP application. In the absence of the EAP, the tax to GDP ratio would be below the actual, with the inverse happening for the primary public expenditure ratio and for the public debt interest rate. Overall, our results support the likelihood of less disciplined fiscal accounts in the absence of the EAP.

Is EU Fiscal Governance Effective? A Case Study for the Period 1999–2019

This paper examines the factors that influence the effectiveness of fiscal governance in the EU through a panel of 19 Eurozone countries for the period 1999–2019 using an OLS method. The results show the positive effects of economic growth, inflation and the change in the general government balance on the fiscal forecast error. Furthermore, the fiscal forecast error is negatively affected by the level of public debt and by elections. Fiscal transparency is integrated into the analysis through independent financial institutions, which positively influence the general government balance forecast error. Finally, Economic Adjustment Programs have a positive effect on the fiscal forecast error, thus improving the efficiency of fiscal governance. This paper suggests that independent budgetary institutions, such as fiscal councils, and the delegation of further responsibilities to them increase countries’ sustainability of public finances.

The myth of economic incentives around the debate on the design of optimal pension systems: A survival analysis for the Argentine case

AbstractFrom a panel of administrative data of contributors to the Argentine pension system, a survival analysis was carried out to compare the time in months until contributor status is lost for individuals who reach the minimum retirement age. The analysis involves two periods: one where the fully funded scheme was in force and the other with the pure pay‐as‐you‐go scheme in effect. It is observed that the survival curve of the contributor status during the second period is always above that in the first one, indicating that the probability of maintaining this status was always higher during the second period. Likewise, it was found that belonging to the cohort/group of the first period is significant in explaining the risk of losing contributor status, even controlling for other relevant variables. This result contrasts with the predictions of the World Bank about the best incentives that the fully funded scheme would generate for the supply of formal labor.Related ArticlesAngelaki, Marina, and Leandro N. Carrera. 2015. “Radical Pension Reforms after the Crisis: A Comparative Analysis of Argentina and Greece.” Politics & Policy 43(3): 378–400. https://doi.org/10.1111/polp.12117.Hazakis, Konstantinos J. 2015. “The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis.” Politics & Policy 43(6): 822–54. https://doi.org/10.1111/polp.12141.Jakee, Keith, and Keith Stacy. 2021. “Revisiting Pension Reform in Sweden: The Role of Corporatism (and Why it Matters).” Politics & Policy 49(3): 651–81. https://doi.org/10.1111/polp.12405.

Policy change and the failure of pro‐European agency in the British Conservative Party: A post‐structuralist analysis

AbstractUnder a post‐structuralist lens, the policy change through which Britain left the European Union in January 2020 is not only about the success of the Euroskeptic policy position at the 2016 referendum, but also about the failure of pro‐European agency in major British political parties like the Conservative and Unionist Party (CP). This article applies critical logics analysis—social, political, and fantasmatic—to deployments of pro‐European agency within the CP across three historical periods: (i) a pre‐Maastricht period, (ii) a Maastricht period, and (iii) a pre‐referendum period. I outline reasons for which key conservative agents failed to restore meaning to a policy routine for upholding British membership of European institutions. In doing so, I aim to demonstrate the capacity of post‐structuralist policy analysis to make insightful, rigorous, and useful contributions to political science and its important issue of policy change by way of comparison with more established models.Related ArticlesEnglish, Patrick, Maria T. Grasso, Barbara Buraczynska, Sotirios Karampampas, and Luke Temple. 2016. “Convergence on Crisis? Comparing Labour and Conservative Party Framing of the Economic Crisis in Britain, 2008–14.” Politics & Policy 44(3): 577–603. http://doi.org/10.1111/polp.12160.Hazakis, Konstantinos J. 2015. “The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis.” Politics & Policy 43(6): 822–54. https://doi.org/10.1111/polp.12141.Temple, Luke, Maria T. Grasso, Barbara Buraczynska, Sotirios Karampampas, and Patrick English. 2016. “Neoliberal Narrative in Times of Economic Crisis: A Political Claims Analysis of the U.K. Press, 2007–14.” Politics & Policy 44(3): 553–76. https://doi.org/10.1111/polp.12161.

Recovery, resilience and growth regimes under overlapping EU conditionalities: the case of Greece

This paper attempts to weigh into the debate on whether and if so, to what extent the policy response to the pandemic of the EU, most notably among others, the Recovery and Resilience Fund of the Next Generation EU, its conditionality, and the response of the ECB, marks a qualitative change rather than echoing the legacies of the previous crisis by looking into the case of Greece. According to the third-generation comparative capitalism literature, EU economic integration has been favouring export-led growth models over domestic-demand led ones through several channels, which included fiscal rules, financial support conditionality and monetary policy. During the pandemic, there have been apparent shifts in some of these channels. Greece has entered the pandemic with vulnerabilities from previous economic adjustment programmes it had to follow, large enough to warrant ‘enhanced surveillance’ by the European Commission, as well as challenging fiscal conditionality to secure some preferential treatment by its Eurozone partners/lenders of its public debt, to improve its fragile sustainability. This article assesses the risks that the Greek Recovery and Resilience Plan may face, given the economic, social and political legacies of and the lingering conditionality from the previous crisis. It thus illustrates how the implementation of the EU response to the pandemic in Greece is constrained by the legacy of the previous crisis despite shifts in policy channels through which the EU economic integration has been shaping national capitalisms.

The macroeconomic content of analyst news during economic crises and bailouts

This study examines the macroeconomic content of financial analysts’ news conditional on the state of the economy. The study analyses data from major markets in the Eurozone from 2005 to 2018, a period that includes an economic exuberance phase, followed by a global crisis that led to the application of economic adjustment programmes for several countries. The empirical findings show that analysts incorporate a positive association between expected GDP growth and corporate earnings growth, primarily driven by the investment component of GDP growth. The informativeness of macro expectations for analysts’ news increases as macroeconomic revisions are released, except for the crisis-bailout period, when analysts respond to macro revisions earlier in the horizon but systematically overreact to them. Analysts’ news is value relevant during the crisis-bailout period, with increased relevance for timely forecasts.

Monetary policy and anxious presidents: The effects of monetary shocks on presidential job approval

AbstractUsing high‐frequency identification, I show that the Federal Reserve significantly influences its political environment. A 50‐bp exogenous contractionary monetary shock is associated with a decline in the U.S. president's job approval by up to five percentage points in the subsequent 12 to 24 months. This loss exceeds the victory margin in six out of the eight latest elections. My findings also suggest that presidents who are in the second half of their terms are particularly vulnerable to monetary shocks. Such vulnerability is largely explained by the evolving attitudes toward key macroeconomic factors like unemployment and inflation over the presidential life cycle.Related ArticlesCho, Sungdai, and Garry Young. 2008. “The Asymmetric Impact of Inflation on Presidential Approval.” Politics & Policy 30(3): 401–30. https://doi.org/10.1111/j.1747‐1346.2002.tb00128.xHazakis, Konstantinos J. 2015. “The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis.” Politics & Policy 43(6): 822–54. https://doi.org/10.1111/polp.12141Pulatov, Abdullo, and Ahmad Hassan Ahmad. 2021. “Political Business Cycles in Post‐Communist European Countries.” Politics & Policy 49(5): 1248–69. https://doi.org/10.1111/polp.12427

Political Business Cycles in Post‐Communist European Countries

This article analyses political business cycles (PBCs) in ten former European communist countries. The dataset used covers the period 1990‐2018. The results show that the PBCs manifest themselves in these countries through both fiscal and monetary policy. Changes in government expenditure during election times are found to be significant in reducing unemployment. Hence, it signals that there is a politically driven fiscal expansion. The results also show the importance of institutional quality in reducing the effects of the PBCs. The monetary policy models indicate that changes in money stock during and around election times affect the unemployment rate. Undertaking a subsample analysis of the non‐EU and EU members highlights the case that the membership of the EU is an important factor in preventing the development of PBCs.Related ArticlesHazakis, Konstantinos J. 2015. “The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis.” Politics & Policy 43 (6): 822‐854. https://doi.org/10.1111/polp.12141Rogers, Chris. 2009. “The Politics of Economic Policy Making in Britain: A Re‐Assessment of the 1976 IMF Crisis.” Politics & Policy 37 (5): 971‐994. https://doi.org/10.1111/j.1747‐1346.2009.00207.xSager, Fritz, and Markus Hinterleitner. 2016. “How do Credit Rating Agencies Rate? An Implementation Perspective on the Assessment of Austerity Programs during the European Debt Crisis.” Politics & Policy 44 (4): 783‐815. https://doi.org/10.1111/polp.12165

The effectiveness of primary health care reforms in Greece towards achieving universal health coverage: a scoping review

IntroductionBetween 2010 and 2018, Greece implemented an Economic Adjustment Programme and underwent a series of extensive reforms, including in the health sector. We conducted a scoping review to examine whether the Primary Health Care reforms during that period assisted the country in moving towards Universal Health Coverage.MethodsWe performed a review of the literature on the following databases: Scopus, PubMed, Epistemonikos, Web of Science, and Google Scholar, including published research articles and grey literature. Findings were synthesised thematically, using the World Health Organization Universal Health Coverage dimensions: population coverage, service coverage, and financial protection.ResultsForty-four documents were included in this review. Out of these, thirty-eight were research-based (thirty-three qualitative, two quantitative, and three mixed design studies), two grey literature, and four legislative bills. The evidence suggests that despite the systemic interventions addressing longstanding distortions, population coverage, service coverage and financial protection have not significantly improved.ConclusionsThis review suggests that Primary Health Care reforms in Greece have not managed to substantially improve Universal Health Coverage, although some positive steps towards that direction have taken place with the establishment of community-based multidisciplinary health teams. Before further interventions are implemented, an evidence-based monitoring and evaluation mechanism is necessary in order to clearly evaluate their effectiveness and progress.

Leveraging the European Refugee Crisis: Forced Displacement and Bargaining in Greece's Bailout Negotiations

AbstractHow does forced migration feature in EU member states' foreign policy and how does it affect their bargaining strategies? While the literature highlights EU‐level policies aiming to manage forced migration flows, we examine how Greece sought to leverage its response to the 2015–16 European migrant crisis. We propose a theoretical framework that explains why the SYRIZA–ANEL government sought to leverage Greece's position as a refugee‐host state via an issue​‐linkage strategy tying the management of forced migration to economic aid over the Third Economic Adjustment Programme. Initially employing a ‘blackmailing’ strategy focused on threats, Greece shifted to a ‘backscratching’ strategy of co‐operation after March 2016, once its geopolitical importance and numbers of asylum seekers within its territory were reduced. We provide the first detailed analysis of Greece's foreign policy response to the European migrant crisis, demonstrating the importance of forced displacement in the international politics of EU member states.

The Effects of the Economic Adjustment Programmes for Greece: A Quasi-Experimental Approach

Three Economic Adjustment Programmes (EAPs) were implemented in Greece, between 2010 and 2015, without achieving the proposed economic objectives. This article analyses the impact of the EAPs in Greece using the synthetic control method (SCM) and has three main contributions. First, it identifies a long-term negative impact worth 35.3 per cent of the Greek GDP per capita caused by the application of the EAPs. Second, it finds that three-quarters of the estimated negative and unsustainable impact accumulated over the 2010–2012 period. Third, it identifies a regressive effect of the EAPs on income distribution, the Greek population with lower incomes experienced a greater negative effect caused by the adjustment programmes. These results underscore the need to review and correct the conditional financial assistance framework currently in force in the European Union.

Austerity, Assistance and Institutions: Lessons from the Greek Sovereign Debt Crisis

This paper studies the Greek sovereign debt crisis in the aftermath of the 2007-8 global financial crisis looking for barriers to, and engines of, growth. The vehicle is a calibrated medium-scale micro-founded macroeconomic model. Departing from 2008, our simulations show that the adopted economic adjustment program (the fiscal austerity mix combined with the fiscal and monetary assistance provided by the EU, ECB and IMF), jointly with the observed deterioration in institutional quality (the degree of protection of property rights) can explain most (around 22% of GDP) of the cumulative loss in GDP in the data (around 26% of GDP) between 2008 and 2016. In particular, the economic adjustment program can explain a fall of around 12%, while the deterioration in property rights accounts for another 10%. Counterfactual simulations, on the other hand, show that this loss could have been around 9% only, if the country had followed a different fiscal policy mix; if the degree of product marker liberalization was closer to that in the core euro zone countries; and, above all, if institutional quality in Greece had simply remained at its pre-crisis level. On the other hand, in the absence of the official fiscal bailouts, the depression would be much deeper, while, the accommodative role played by the quantitative policies of the ECB has been vital to the Greek economy. These results can be useful in the face of the ongoing covid-19 crisis.Supplementary InformationThe online version contains supplementary material available at (10.1007/s11079-020-09613-3)

Greece Before and After the Euro: Macroeconomics, Politics and the Quest for Reforms

This paper analyses developments in the Greek economy before and after the euro. The main thesis is that the imbalances that led to the crisis of the post-2010 period were building up during the previous three decades and that their root causes were not merely economic, but social, structural, institutional and political. The fiscal imbalances created in the 1980s were not adequately addressed by the convergence policies of the 1990s, while the long-standing problem of low international competitiveness was further exacerbated by the failure to promote the necessary structural reforms. Greece's accession to the euro area with major structural and fiscal imbalances and low and deteriorating international competitiveness, led to a steep rise in its external indebtedness. The lopsided adjustment and the inadequacy of the reforms was due to domestic political and social constraints, both before and after euro area entry. In view of the institutional weaknesses of the euro area itself, the external imbalances ultimately led to the external debt crisis of 2010, the imposition of the economic adjustment programs and the ‘great depression’ of the 2010s. The paper also explores the prerequisites for a sustained recovery of the Greek economy within the euro area, once the global economic crisis induced by the coronavirus pandemic is over. The quest for wide ranging reforms remains Greece’s top priority.

Impact of macro-socioeconomic determinants on sustainable perinatal health care in Portugal: a qualitative study on the opinion of healthcare professionals and experts

BackgroundThe WHO identified the importance of macro-socioeconomic determinants and political context as interlinked key factors affecting healthcare quality and health equity. As a response to the recent economic and financial crisis, Portugal approved in 2011 the Economic Adjustment Programme (EAP) to obtain financial assistance from the Troika in order to reduce public debt. This study aims to analyse the impact of the economic crisis and the EAP on perinatal healthcare quality for very preterm (VPT) and/or very low birth weight (VLBW) infants, as perceived by healthcare professionals and experts, within the health administrative regions of the two major metropolitan areas in Portugal.MethodsA qualitative approach was applied to receive an in-depth understanding and accomplish perspective variability. A purposive sampling technique was used. Semi-structured interviews were conducted with twenty-one healthcare professionals and experts between October 2018–July 2019. Inductive thematic analysis was performed which encompassed a five-step categorization procedure. Data analysis was undertaken by utilizing Nvivo2011 software. Evolved themes were then associated with WHO’s Quality Standards on Maternal and New-born Care. A framework on the impact of macro-socioeconomic determinants on perinatal health care quality was developed.ResultsAlthough participants did not perceive the quality of perinatal care had deteriorated, the analysis of their accounts on work experience revealed that it was indeed adversely modified in all WHO Quality Standards. Health care provision was perceived as detrimental in five main areas: 1) Availability of human resources; 2) Functional referral systems; 3) Competent and motivated human resources; 4) Emotional support; and 5) Essential physical resources available. Policy reforms by the EAP resulted in reduced timeliness of care, increased waiting times, cuts in sequence and duration of consultations, and deficiencies in follow-up care for VPT/VLBW infants and their mothers. The EAP directly influenced working environment of healthcare professionals by causing stress, burnout, work absence, and brain drain.ConclusionAn interrelation between macro-socioeconomic determinants and perinatal health care quality was disclosed. The economic crisis and EAP have adversely modified equitable perinatal health care quality for VPT/VLBW infants and their mothers. Our findings underlined the negative impact of austerity policies on vulnerable populations.