Reform Of Economic Governance Research Articles

Dynamic panel analysis of the EU's fiscal reaction function with threshold effects

AbstractThis study contributes to the ongoing reform of the EU's economic governance, particularly about fiscal performance. We opt for a fiscal reaction function of the cyclically adjusted primary balance. Given concerns over underlying endogeneity and heterogeneity across countries we employ a threshold dynamic analysis. The findings confirm that the fiscal policy in the EU has been procyclical overall. However, we identify two regimes of output gap. Fiscal policy has been countercyclical for EU member states in the higher output gap regime while EU member states follow a procyclical fiscal policy in the lower regime. We reveal also that the endogenous debt‐to‐GDP ratio threshold is at 75.6% for the EU and 78.7% for the Euro area, which notably exceeds the EU Treaty's reference value of 60%. Fiscal rules and fiscal councils mitigate procyclical fiscal policies, being more effective for low debt countries. In terms of policy implications, the identified fiscal thresholds and variability across countries warrant a higher degree of fiscal coordination in the EU, particularly in the Euro area.

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.

The nrrp as a “Self-Restraint” and as a Development of the (Spending) Conditionality Mechanism

Abstract The paper analyzes the conditionality mechanism triggered by the Next Generation EU and by the National Recovery and Resilience Plan. In particular, the interpretation used sees in the nrrp the last stage of the process of conditionality and as a development of the concept of external constraint. Finally, the nrrp is related to the monetary policies of the ecb and to the reform of European economic governance.

China’s Initiatives: A Bypassing Strategy for the Reform of Global Economic Governance

China’s Initiatives: A Bypassing Strategy for the Reform of Global Economic Governance

Еще раз о том, куда идти: к стратегии развития в условиях изоляции от Запада

It is shown that the program of institutional changes, outlined in a number of articles of the author, is even more relevant in the current context of sanctions and needs to be further elaborated. Due to restrictions on import and export flows, the need to form long chains of added value within the country is increasing. Business cannot cope with this task on its own. To solve it the institutions of catching-up development are needed, including the system of indicative planning headed by the general development agency and the national innovation system aimed at borrowing of technologies with a gradual increase of own innovative developments. It is advisable to conduct the reform of economic governance as a continuation of the reform of project activities carried out in 2018–2019. New institutions must ensure economic growth by forming a set of mega-projects and programs, coordinated with each other and with the budget, based on the coordination of efforts of the state, business and society at the federal, regional and municipal levels. The increased necessity of differentiated progressive income tax introduction is underlined. The expediency of forming consortiums, expanding the system of sector research institutes and increasing investment in education are noted.

The Macroeconomic Imbalance Procedure at the Heart of EU Economic Governance Reform

While the euro officially came into being in 1999, it was the introduction of euro notes and coins 20 years ago in January 2002 that made the common currency a tangible reality for European citizens. The circle of member states has since grown from 11 to 19, and a growing section of the population no longer has any personal experience with a “national” currency, yet the debate on the legal and institutional framework underpinning the common currency has never gone away.

Fertile Ground: Implementing the 2030 Agenda in U.S. Cities

The 2030 Agenda for Sustainable Development promotes sustainable global prosperity by encouraging the coordination of social, economic, and environmental policies and good governance reforms. Cities are expected to play an essential role in implementing the 2030 Agenda. Local programs are to be implemented by multi-actor governance systems (including government agencies, businesses, nonprofits, and philanthropic organizations) that operate across multiple policy domains and provide extensive opportunities for stakeholder participation. Local program finance may require a combination of public, private, and philanthropic resources. We analyze the prospects for local implementation of the 2030 Agenda in large U.S. cities by examining local capacity to plan and carry out cross-sectoral collaborative initiatives. We review sustainability planning in the cities that participated in the Sustainable Development Solutions Network planning demonstration. We analyze an inventory of urban revitalization initiatives to assess local capacity to carry out collaborations. We show that local capacity is associated with having an active local environmental agenda and making progress toward achieving sustainable development goals. However, local capacity appears to be concentrated in larger cities. Although the demands on local governance are daunting, our examination of local capacity to plan and execute cross-sectoral collaborative initiatives in large U.S. cities creates guarded optimism.

The New Economic Governance: The Reaffirmation of a Fiscal Governance Machine

This article engages critically with the International Governmentality Studies, delineating a new use of Foucault’s toolbox applied to analyse the New Economic Governance (NEG) reforms. The main argument is that the NEG is a reaffirmation and a reinforcement of the fiscal governance machine established with the Stability and Growth Pact (SGP). The fiscal governance machine is an ensemble of techniques shaped by and through which the European art of government is able to work in the entire European space. The article analyses how the Treaty on Stability Coordination and Governance reaffirms this fiscal governance machine. By looking at three techniques – the structural deficit, the Fiscal Council, and the Automatic Mechanism – it shows some key features of this fiscal governance machine: a new discretional power in the hand of the European Commission and of its DG Finance, a decentralised and semi-automatic form of control on Member states, the structuration of a euro-national ensemble of executives and finance institutions.

BRICS, G20 and global economic governance reform

The article reviews cooperation between the BRICS countries (Brazil, Russia, India, China and South Africa) and their collective efforts to promote reform of international financial institutions, shape global financial regulation and improve financial cooperation. The authors focus on the BRICS–G20 engagement for global economic governance reform. To assess the progress so far, the study employs original quantitative data on the BRICS and G20 commitments and compliance, and qualitative analysis of the BRICS and G20 discourse and the transformation of the international economic architecture. The results suggest that, contrary to the common perception of the BRICS as a challenger of the traditional western-dominated international monetary and financial system, it acts in a cooperative manner, seeking to make the international financial architecture and global regulation more representative and responsive to emerging markets and developing economies needs, and strengthen the stability and resilience of international and domestic financial markets.

Do Independent Fiscal Institutions Enhance Parliamentary Accountability in the Eurozone?

Independent fiscal institutions (IFIs) have been established or reformed in all eurozone countries following the reform of economic governance. As they are expected to counter the deficit bias of the governments and the information asymmetry of the legislatures and the public over the management of the budget, IFIs may support or even strengthen parliamentary accountability. This hypothesis is tested with regard to three IFIs, the Irish Fiscal Advisory Council, the Italian Parliamentary Budget Office, and the Spanish Independent Authority for Fiscal Responsibility. Although the economic context in which the IFIs were created was similar in the three eurozone countries, as was their mandate, these institutions have a rather different institutional positioning, being within the Parliament, in Italy; within the Executive, in Spain; and a stand-alone body in Ireland. This is likely to influence the IFIs’ contribution to parliamentary accountability, we hypothesize that the closer the position of an IFI and its contacts to the parliament, the stronger is the scrutiny of the executive on budgetary policies. The analysis of parliamentary questions, hearings, and of the activation of the ‘comply or explain’ procedures shows that, overall, the IFIs’ potential role to enhance parliamentary accountability has remained underexploited by the three legislatures, with no significant differences as for the institutional positioning of the IFI.

Post-COVID Prospects for the EMU: The Pandemic Core-Periphery Divide, Palliative Measures and the Stakes of the Conference on the Future of Europe

The policy brief draws from previous and ongoing research on the heterogeneities of the impact of the - in principle - symmetric shock of the pandemic within the EU. Considering the pre-existing gaps within the core and periphery, further worsened by the Covid-19 outbreak, the analysis presents the economic and social prospects in 2020 and in the years to come across the Member States. In doing so the work identifies the key challenges in line with the legacy of the Eurozone crisis and well-established limits of EMU governance assessing palliative emergency instruments such as Next Generation EU against the benchmark of the scale of the core-periphery divide. In doing so the contribution puts forward policy recommendation for ambitious reform of economic governance of the Eurozone, against the backdrop of an unprecedented window of opportunity for transnational solidarity opened by the pandemic crisis in parallel with the onset of the Conference of the Future of Europe.

Bargaining outcomes and success in EU economic governance reforms

AbstractWe assess the accuracy of procedural and bargaining models in predicting the outcomes of the reforms of the economic governance of the European Union (EU) that took place between 1997 and 2013. These negotiations were characterized by high costs of failure. We confirm the accuracy and robustness of the compromise model, but a procedural model with a costly reference point performs well, indicating that misestimation of the no-agreement cost may be a reason for its commonly reported poorer accuracy. However, this model is more sensitive to measurement errors. We also show how both models contribute to understanding bargaining success and how the conditional influence of the European Parliament should not be ignored. We conclude by discussing the implications of these results for our understanding of the EU.

The Politics of Labour that Underlies European Monetary Integration

AbstractThe dominant literature on the development of the EU's new economic governance regime suggests that it constitutes another step towards integration in the European fiscal policy framework. However, I argue that this limited view neglects the politics of labour that underlies European monetary integration. In the euro area competitiveness adjustment is promoted, which means in practice fostering and facilitating the confrontation of workers by employers in order to keep unit labour costs down. The new economic governance reforms consistently reinforced this policy‐making logic. Its central innovation was the systematization and 'hardening' of the macroeconomic surveillance framework beyond fiscal policy, which created new competences at the EU level to intervene in national labour market policies, including wages. This is what is actually new about the new economic governance; marking a recent key moment in European monetary integration and reinforcing the politics of labour underlying it.

Economic Governance Reforms to Support Inclusive Growth in the Middle East, North Africa, and Central Asia

"Volume 2021 (2021): Issue 001 (Jan 2021): Economic Governance Reforms to Support Inclusive Growth in the Middle East, North Africa, and Central Asia" published on 13 Jan 2021 by International Monetary Fund.

Rising Powers and the Reform of Global Economic Governance: The BRICS and the Normative Challenge Ahead

At a time when the liberal international economic order seems under threat, the transformation of global economic governance poses a strong normative challenge to existing international institutions. The recent establishment of new international financial institutions (IFIs)–the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB)—signified a steady process of transformation of the architecture of contemporary global governance. How rising powers understand, establish and conduct formal and informal rules within new international financial systems is of fundamental importance for the future of world economic order, although not necessarily signaling a decline for the Western-style economic governance and its normative principles. While global economic governance has profoundly changed in the last decade, the suggestion here is that rising powers’ efforts to reshape the current global economic order have often been overestimated and only partially contextualized within the enormous achievements gained from economic opportunities driven by Western globalization. Focusing on the contestation of these different worldviews, the paper analyzes the approach of BRICS (Brazil, Russia, India, China and South Africa) New Development Bank countries to global economic governance within the newly established IFIs, questioning how the normative challenge represents either an opportunity or a threat to the current global order.

Assessing the Potential for Global Economic Governance Reform

Every dynamic social system’s adaptive capacity is finite. Eventually, the ability of the system’s legal and institutional arrangements to adapt to the changing operational context is exhausted. At this point, unless the system is significantly reformed, it begins losing its legitimacy and efficacy.This article contends that the structure, operation and scale of the global economy has changed so dramatically that the current arrangements for global economic governance are approaching this crisis moment. They are failing to deliver an inclusive, sustainable and efficient international economic system that can contribute to peace, prosperity and human welfare. Their governance arrangements and operating practices and procedures have not been adequately adapted to the new realities of the international political economy. Key institutions are only slowly adjusting their current decision-making practices to the fact that the balance of economic power among their members has shifted. They have also been slow in responding to the growing importance of such non-state actors as corporations, civil society organizations and subnational governments in the governance of the global economy.However, the political will to make the necessary changes to the institutional arrangements for global economic governance is lacking. This means that in the short to medium term, absent a serious crisis, there is limited potential for reform. However, this does not mean that opportunities for meaningful partial reforms do not exist. Those actors that are interested in reform need to carefully seek out those opportunities and, once identified, use them to make the system more participatory, accountable and responsive to the concerns to all stakeholders in the system. This in turn should enhance the capacity of the system to respond productively to future opportunities for more profound changes in global economic governance.In making this case, the article first briefly describes the key features of the order established after World War II. Second, it discusses some of the changes that these institutions have undergone over the past 70 years. Third, it discusses the adjustments that, in fact, have been made in global economic governance. It also indicates some ways in which opportunities for making the system more inclusive, responsive and accountable can be identified. Finally, it offers suggestions regarding possible changes within the current order and on the role entities like the Group of 20 and the BRICS grouping of Brazil, Russia, India, China and South Africa can play in promoting these changes.It should be noted that, due to space limitations, while this article discusses global economic governance in general, it concentrates primarily on the cases of the two most prominent institutions in global economic governance - the International Monetary Fund (IMF) and the World Bank Group (the World Bank). The reason for focusing on the IMF is that it is the most significant multilateral institution active in the governance of international financial and monetary affairs. The World Bank is an important funder of development activity even if it is not the largest such lender. It is the model that was used in setting up all of the regional multilateral development banks (MDBs) and it has had an influence on the structure and function of other MDBs as well, such as the Asian Infrastructure Investment Bank. It has also been a thought leader in the area of development finance.

Financing the Sustainable Development Goals (SDGs)

It is already clear that we are not on track to meet the SDGs. Getting back on track will require significant reforms of the global financial and economic system. This article examines the features of different development financing sources, systemic issues in the global economy and the way it is governed and sets out a programme of global economic governance reform to support the achievement of the SDGs.

National social spaces as adjustment variables in the EMU: A critical legal appraisal

AbstractThe article critically engages with the reconfiguration of the role and status of national social spaces within the EU constitutional fabric after the reform of European economic governance. Its main contention is that these reforms have converted national social spaces into adjustment variables whose main function is to contribute to the pursuit of EMU‐related objectives. This transformation alters the balance between the economic and the social dimension in the EU legal order, deforming one of the defining traits of its constitutional identity.

EU economic governance and austerity: Exploring recent perspectives

AbstractThis paper presents some of the main theoretical approaches which examine changes in the EU economic governance system during the current crisis. We review standard approaches of EU studies (neo‐functionalism, liberal inter‐governmentalism, and historical institutionalism), Marxist–regulationist political economists, and Bourdieusian sociologists. The paper illustrates how scholars utilize given intellectual tools to understand ongoing trends of political and institutional change. We suggest that Bourdieusian sociologists may be in a relatively better position to interpret governance reforms and this is briefly illustrated by looking at some empirical observations from researching the effect of EU economic governance reform on the management of public assets in Greece.

THE NEW EU VOTING SYSTEM - THE OLD WEST-EAST NORTH-SOUTH DIVISION

Economic governance reforms and Eurozone consolidation has significant institutional and political consequences: a multiple-tier integration is ever more realistic. „Out” countries seek to mitigate the negative impact of these developments. In this respect V4 - Visegrad countries differ a lot: Slovakia, a relative latecomer in economic reforms is part of the currency union. Poland, Hungary and the Czech Republic are not Euro-members. But even this sub-group is divided: Poland intends to join whenever requirements are fulfilled while the Hungarian and the Czech governments are cool on accession. At the same time, further economic federalisation in the Eurozone is to come. Against this background, the question whether a long-term "great divide” among V4 group countries in relation to their EU policies and consequently their future situation in the rapidly altering EU will be maintained, is of key importance.