Economic Governance Framework Research Articles

Social dialogue in defining the European Union economic and social strategy

Following very significant initiatives, such as the European Pillar of Social Rights and its Action Plan, the Commission presented in 2023 its Communication on Strengthening social dialogue in the European Union: harnessing its full potential for managing fair transitions, together with a Proposal for a Recommendation to the Council on strengthening social dialogue. The present analysis will discuss the progress and limitations of these initiatives, such as the lack of binding nature of the legal instruments used or their effect on policymaking. In this regard, particular attention will be paid to the insertion of social dialogue into European economic and social governance mechanisms. To this end, the study deals with the influence of the economic governance framework on the role and development of social dialogue in the most recent transformations that have taken place since the 2008 crisis to the present. Likewise, the role given to social dialogue will be analysed in the new fiscal rules and economic governance framework recently approved.

Can institutional opening-up promote green development in cities? Evidence from China's Pilot Free Trade Zones

As a testing ground for China's institutional opening-up, Pilot Free Trade Zones (PFTZs) are of great significance in shaping a new global economic governance framework, addressing pollution and carbon reduction challenges, and fostering green economic development and transition. This study empirically assesses the influence of PFTZs establishment on urban green development (GD) using panel data from 284 Chinese cities between 2007 and 2020, using the asymptotic Difference in Differences (DID) method. The results indicate that the creation of PFTZs greatly encourages cities to develop green sustainably. In comparison to cities without PFTZs, the presence of PFTZs results in a notable average increase of 9.5% in urban green total factor productivity (GTFP). The impact of PFTZs on urban GD varies significantly across different geographical areas and city resource endowment conditions. Institutional innovation has a positive moderating effect on the PFTZs' promotion of urban GD. The influence mechanisms that PFTZs support urban GD mainly include the effects of green innovation, economic agglomeration, and environmental regulation. This paper provides crucial policy insights for advancing PFTZ construction, promoting urban green growth, and ultimately achieving the coexistence of human beings and nature in harmony.

Council

This overview highlights the Council’s (i) formal adoption of a new Economic Governance Framework, (ii) publication of a compromise text on FASTER and call to Member States to reach a common general approach, (iii) political agreement reached on FASTER, and (iv) appeal raised by Fugro NV in the case concerning its action for annulment of the Minimum Taxation Directive (2022/2523).

National Independent Fiscal Institutions Need to Be Stronger to Perform Effectively

Abstract In April 2023, the European Commission issued a directive proposal on EU economic governance reform. The Council cut some tasks of Independent Fiscal Institutions (IFIs) that were in the Commission directive proposal; whether this cutting is justified is an open question. Early this year, the Council and the Parliament reached a provisional agreement on the proposed reform of the EU economic governance framework. The vision of the Commission that would involve IFIs in the assessment of fiscal-structural plans is not groundless. But structural reforms and investment analysis demand expertise that hardly exists in most national IFIs, and their involvement in policy design could be perceived as a technocratic inroad into democratic decision-making. In order to play a more significant and effective role, national IFIs need adequate resources and enhanced analytical capacity; their activity depends heavily on the policy design of the EU economic governance. National IFIs should view their role from a macroprudential perspective, too. The role of IFIs should not go beyond what most of them can deliver effectively, so that their status and reputation are not harmed.

Government debt: the impact of fiscal rules at the European and national level

As Europe and the world surface from the pandemic of 2020–2021, public debt levels have risen substantially, the review of the European Union (EU) economic governance framework is underway and the general escape clause of the stability and growth pact (SGP) is planned to be deactivated at the end of 2023. Against this background, it is important to better understand the dynamics of public debt in the EU. This paper studies how European institutions and sectoral national fiscal rules have affected the formation of public debt. The results suggest that over the last 25 years, the SGP has been an effective tool for lowering government debt levels, at least on average. The establishment of the SGP has been the most effective at lowering government debt, while reforms of the SGP have only had limited effects. The effects of national fiscal rules are heterogenous across different rules and public sector classifications, but it seems that national fiscal rules have at least some effects beyond the SGP in all studied cases. This implies that the EU fiscal framework and EU-level fiscal policies should take into account potential interactions with national fiscal rules and both can be used to increase the effectiveness of fiscal policymaking.

The Economic and Monetary Union (EMU): status quo and the way forward

The present paper, structured in three sections, contains a brief presentation and analysis of the foundations and development of the European Economic and Monetary Union (EMU) and of the policies implemented therein. Section A (“Key Design Elements of the Economic and Monetary Union (EMU)”) sets out the institutional foundations of the EMU. The following Section B (“The Impact of the Four Major Crises During the Period 2007-2022”) develops, through the lens of the (2007-2009) global financial crisis (GFC), the subsequent fiscal crisis in the euro area, the pandemic crisis and the recent (since 2022) inflation crisis, on three aspects: how the single monetary policy by the European Central Bank (ECB) within the Eurosystem has been implemented; how the Economic Union has been strengthened (inter alia, regarding sovereign crisis management); and what is the role of the ECB, beyond the exercise of its monetary policy and other basic tasks within the Eurosystem, within the European System of Financial Supervision (ESFS) and the first pillar of the Banking Union (BU), which were, respectively, “children” of the two first above-mentioned crises. Finally, Section C (“The Way Forward”) discusses current trends and developments in relation to the implementation of monetary policy; the ongoing reform of the economic governance framework and the link between monetary and fiscal policies; as well as the ‘unfinished’ agenda in relation to the Banking Union.

Historical institutionalism and policy coordination: origins of the European semester

Using historical institutionalism as a theoretical foundation, this paper explores whether multilateral surveillance and policy coordination under the European Semester (ES), introduced in the aftermath of the global financial crisis of 2007–2008, was based on a path-changing or a path-dependent mechanism. Following a legal-historical analysis going back to the Maastricht Treaty, we demonstrate that the ES in its institutional form was not the result of a crisis-induced critical juncture, but rather of a gradual, path-dependent historical evolution which kept the balance of power relations in the European Union (EU) broadly unchanged. With this, we offer a critique of literature on the post-crisis European economic governance framework, which sees an increase in the influence of supranational actors, notably the European Commission. Focusing on the ES, our paper puts forward an alternative view, grounded in the theory of historical institutionalism, arguing that the balance of power relations has broadly stayed the same. The conclusion is based on a legal-historical analysis of 12 indicators, which help to understand the evolution of the ES.

Remarks on Johan van der Walt’s Concept of Liberal Democratic Law

This article engages with Van der Walt’s concept of liberal democratic law. Firstly, it shows that his concept is significantly influenced by Hans Kelsen’s theory, mainly by Kelsen’s democratic political theory but also by Kelsen’s legal theory (insofar as the latter is considered to be related to the former). Secondly, it demonstrates that he goes also beyond Kelsen’s theory by considering necessary for the sustainability of liberal democratic law an adequate social state. Given this, I argue that there is, to an extent, a proximity to Hermann Heller’s social Rechtsstaat theory. Thirdly, it shows that – although the socio-economic level is, to an extent, considered – he leaves unexplored the rise of independent technocratic institutions in the economic governance framework of contemporary liberal democracies (the independent central banks, like the European Central Bank, being the main example). I argue that this issue needs to be explored in order to reach a realistic understanding of liberal democratic law (an understanding that Van der Walt aims at).

The European Commission’s legislative proposals on reforming the EU economic governance framework: a first assessment

The European Commission’s legislative proposals on reforming the EU economic governance framework: a first assessment

The Commission's Orientations for Reforming the EU Economic Governance Framework: A Legal Analysis

The Commission's Orientations for Reforming the EU Economic Governance Framework: A Legal Analysis

FISCAL POLICY AND LONG-TERM ECONOMIC GROWTH: LESSONS FROM THE EURO AREA

At the beginning of 2020, the European Union embarked on a process of reviewing its macroeconomic policy strategy and economic governance framework. While the review of the monetary policy framework was approved in July 2021, the review of the fiscal policy framework was put on hold as a result of the outbreak of the covid-19 pandemic and the ensuing economic crisis. The Covid-19 crisis led to a breach of fiscal rules in the European Union and an unprecedented increase in the size of fiscal imbalances. In this context, there is a need for a radical reform of the fiscal rules still in force to allow for a more active role of national fiscal policies and to avoid the serious economic problems resulting from the fiscal austerity policies emanating from the Maastricht Treaty, the Stability and Growth Pact and the successive reforms of the latter.

The EU's New Economic Governance Framework and Budgetary Decision‐Making in the Member States: Boon or Bane for Throughput Legitimacy?*

AbstractThe euro crisis has sparked changes in the EU's economic governance framework and a crisis of legitimacy across the union. While the institutional repercussions of the crisis have been studied before, the democratic impact at the national level has received much less attention. This paper aims to fill this gap, focusing on the procedural changes that the EU's new economic governance (NEG) framework has brought to national budgetary decision‐making. Building upon the Varieties of Democracy framework, the paper adds empirical nuance and conceptual clarity to the notion of ‘throughput legitimacy’ and its components: openness, inclusiveness, transparency and accountability. Detailed case studies of post‐crisis Austria, Italy and Portugal show that the NEG improved access to national budgetary decision‐making and enhanced executive scrutiny, while excessive complexity remains the Achilles' heel of EU fiscal rules. We submit that these procedural changes are too meaningful to be overlooked in post‐crisis debates about EU democracy.

Sports Economy and Fight against Corruption: Which Limits to the Sporting Organisations Autonomy?

This research studies the impact of the growth of the sports economy on the limitation of the autonomy of sports organisations, taking into account the driving role of the sovereign power of public orders to fight against corruption. It illustrates the idea according to which the economic governance of sport is based on the specific governance of the International Sports Movement and it verifies how and to what extent the public orders are affecting the regulatory autonomy of sport’s transnational legal orders. The study analyses, firstly, the legal status of the sporting organisations, arguing that the fundamental operational and organisational requirements of sporting organisations have international sources and transnational effects. Secondly, it considers the economic competences of sporting organisations, detecting the limits of sport autonomy due to the exercise of economic activities. Thirdly, it points up the international convergences on managerial transparency and some examples of national and international monitoring of economic activities in sporting organisations, delineating the emergence of a specific international legal framework for economic sports governance. The analysis, finally, identifies the limits of the recent developments at international level, exposing the potential role of the European authorities and the legitimate ways to justify the international limitation of the autonomy of sport. Autonomy of sport, Private International Law, Public-private Governance, Corruption, Transnational Legal Order, Sports Economy, Legal Status of Sporting Organisations, Audit, Managerial Transparency, Economic Monitoring, International Sporting Convention

The European Union fiscal policy framework and fiscal sustainability: challenges for the post-crisis environment

The fiscal policy framework in the European Union was originally agreed upon in the Maastricht Treaty 30 years ago. In the following years it has been supplemented (Stability and Growth Pact) and modified, influenced by the experience of its application practice and external shocks, such as the financial crisis. However, the essence of this framework remained the same - member states are obliged to conduct a disciplined fiscal policy, which, in a nutshell, is assessed by comparing the ratio of budget deficit and public debt to GDP in a given country to the reference values. Even before the outbreak of the Covid-19 pandemic, the need to change the mechanisms for disciplining fiscal policy was widely recognized. High and persistent levels of public debt, pro-cyclicality of fiscal policy, shortage of public investment and the complexity of fiscal rules and their weak enforceability are indicated as unfavorable features of public finance. In 2019 the COVID-19 pandemic came as the biggest shock to the world community since World War II. In the context of the provisions on fiscal discipline, in May 2020 the Commission and the Council activated the general escape clause of Stability and Growth Pact, for the first time ever. This has allowed member states to take the necessary fiscal measures to deal with the crisis. On 19 October 2021, the European Commission adopted a Communication relaunching the public consultation, put on hold in March 2020, on the EU?s economic governance framework. The new governance framework should be tailored to the challenges the EU is facing, including the challenge of achieving a fiscal stance that is appropriate for the euro area as a whole. There is a fairly widespread belief in the need to move away from rigid reference values, which should be replaced by solutions that ensure the sustainability of public debt in the differing circumstances of member states. The proposed options for the revision of the EU fiscal framework, although justified in theory, have a fundamental flaw - they strengthen the position of supranational institutions and, moreover, open the door to discretion and potentially unequal treatment of member states. These proposals can be seen in a broader context - the federalization of the EU, which would limit the sovereignty of nation states.

Current account imbalances and the Euro Area. Controversies and policy lessons

The crucial role of current account imbalances (CAI) is widely acknowledged in the consensus narrative of the European crisis that followed the Great Recession. On the basis of this interpretation, CAI play a prominent role in the EU Macroeconomic Imbalances Procedure (MIP), which broadens the EU economic governance framework to include the surveillance of unsustainable macroeconomic trends. Although the widening of the CAI in the Euro Area before the crisis is a matter of fact, and the consensus narrative contains elements of truth, alternative views have been put forward on three main issues: (i) the relevance of CAI, (ii) their causes and connection with the crisis, and (iii) their policy implications. The aim of this paper is to examine these controversial points about the causes, meaning and consequences of CAI, and discuss the alternative policy prescriptions that emerge.

Socio-economic Governance in the EU

This paper focuses on the complexity of socio-economic governance in the European Union. We define socio-economic governance as the process of governing societies in a situation where no single actor can claim absolute dominance thus socio-economic governance is the outcome of the interaction between European Union institutions (European Union decision-makers) and member states (national policy-makers). Since the onset of the global financial crisis and the euro crisis a decade ago, social issues have become substantially prominent in EU governance and policy debate. Furthermore, the Covid-19 crisis brought again social issues to the fore. There is no dedicated social governance framework in the European Union but there are several mechanisms (strategies, initiatives and regulations) through which social governance is practiced. At the same time, the framework for European economic governance has substantially been strengthened as a consequence of the global financial crisis and the euro crisis and can be characterised by a matured but incomplete framework. On the one hand, this paper aims to collect and investigate all governance tools related to economic and social issues in the European Union, and on the other hand, this research examines the impacts of those governance tools on member states.

The EU’s Economic Governance: Development in the Context of Modern Challenges

The article explores the key milestones in the evolution of the economic governance system in the EU in the context of the current challenges facing the European economy. The European single currency is one of the most significant and tangible achievements of a United Europe, and is therefore not just a monetary project. It provides a basis for economies of the Member States to become more integrated with a view to supporting greater stability and prosperity. The architecture of the Economic and Monetary Union, established by the Maastricht Treaty in 1992, is unique whereas it combines a single monetary policy that pursues the objective of price stability with decentralized fiscal and economic policies under the responsibility of Member States. In light of those considerations, the Treaty requires Member States to regard their economic policies as a matter of common concern and to coordinate them within the Council that is, at the intergovernmental level. Since the early 1990s, when the Maastricht Treaty laid the foundations of the single currency area, the EU has developed a very comprehensive and detailed framework for economic and fiscal surveillance. The framework is laid down in a range of secondary legislation, as well as in other documents that provide more details and transparency on how surveillance is carried out in practice. The framework has evolved in waves over time, with changes introduced in response to the emergence of new economic challenges, as well as based on the lessons gained in the implementation of the surveillance framework. In 1997, the Stability and Growth Pact (SGP) was established so as to strengthen the monitoring and coordination of national fiscal and economic policies to permanently enforce the deficit and debt limits established by the Maastricht Treaty for all Member States. In the early 2000s, adherence to the nominal deficit targets of the SGP proved difficult for some Member States in a recessionary environment. That is why the SGP was reformed to allow for greater consideration of economic conditions. In response to the vulnerabilities exposed by the economic and financial crisis that hit the EU and the euro area after 2007, the EU took a series of measures to strengthen its economic governance and surveillance framework. They are relevant for all Member States, but have a number of specific features for those that use the euro. The revamped macroeconomic and budgetary surveillance were integrated into the European Semester, a common timeline for the coordination of economic and employment policies at EU level, and which was established in the same context. Thus, the EU’s economic governance has strengthened and improved over time, evolving in the context of historical events. Its future will depend, in particular, on which scenario for further development the EU ultimately chooses.

Who sets the agenda? The influence of the European Commission and the European Council in shaping the EU’s response to the European sovereign debt crisis

ABSTRACT The aim of this paper is to assess whether the European Commission or the European Council shaped the European Union’s response to the sovereign debt crisis through their respective agenda-setting powers. The paper uses process tracing complemented with interviews to demonstrate the influence of the European Commission and the European Council in this regard. Theoretically, the paper is anchored by a framework of agenda-setting dynamics which is used to assess the European Commission and European Council’s influence in reforming the European Union’s economic governance framework. A systematic analysis of the negotiations of these reforms between 2010 and 2013 indicate that the European Council wielded policy influence through its agenda-setting powers. Conversely, the European Commission exercised less influence in those negotiations, despite its position as the European Union’s de facto agenda-setter.

Austerity-Based Labour Market Reforms in Greece v. Fundamental Rights in the Aftermath of the European Debt Crisis: An Analysis of Supranational and National Bodies’ Jurisprudence

The recent debt crisis in Europe has resulted in a significant number of structural reforms implemented in EU Member States across various fields, including the labour market, either in the context of the bailout mechanisms or the EU Economic Governance framework. This development has provoked fundamental rights concerns and has consequently given rise to litigation strategies that put austerity reforms under the test of legality before supranational and national competent bodies and courts. However, the jurisprudence that has developed in that regard seems incoherent and shows real differences in approach. This study analyses the paths of judicial reasoning that supranational and Greek bodies have adopted in fundamental rights cases challenging austerity-based labour market reforms implemented in Greece during the European Debt Crisis. It concludes that different paths of reasoning have been adopted, which could even be regarded as conflicting at several instances. They are thus reflecting the well-known particularities and discrepancies of fundamental rights protection in Europe as well as the conflicting relationship of social rights with economic and fiscal considerations imposed by austerity in times of crisis and beyond. Austerity, Greece, labour market reforms, fundamental rights, European Debt Crisis, social rights, labour law, ECHR, European Social Charter, Court of Justice of the European Union

Economic and fiscal policy coordination after the crisis: is the European Semester promoting more or less state intervention?

ABSTRACTThe 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.