The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

Costantini, Orsola

doi:10.1007/s10272-020-0917-x

Cited by 7 publications

(5 citation statements)

References 29 publications

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“…Figure I.3 illustrates how fiscal policy is considered at best, a shock absorber, subject to limited and temporary action (Bernanke, 2008) before a return to austerity. This approach has been proven to exacerbate boom-bust cycles and diminish the desired impact from emergency measures, including corporate capture as a contributing factor (Crouch, 2009;Costantini, 2020;TDR, 2021. In turn, this represents a reduction in States' ambition to strategically shape the economic trajectory and comprehensively address heightened inequalities.…”

Section: Corporate Capture and The Demise Of Fiscal Policymentioning

confidence: 99%

Commodities and Development Report 2023

2023

Commodities and Development Report

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ForewordForeword Today, we see setbacks in indicators on poverty, hunger and gender equality, to mention just a few. The financing gap for the Sustainable Development Goals in the global South -which totalled $2.5 trillion in 2015 -now amounts to $4 trillion. Nearly half of all humanity, or 3.3 billion people, lives in countries that spend more resources on debt servicing than on funding health or education. At this pace, only 15 per cent of the Sustainable Development Goals will be achieved by 2030.The Trade and Development Report 2023: Growth, Debt and Climate -Realigning the Global Financial Architecture identifies three specific global challenges that have crystalised during the year 2023. Weak global growth, divergence between major economies and between developing countries, as well as the increased role of geopolitical factors, indicate that we are witnessing a change in the nature of global interdependence, or a transition from the period of hyperglobalization to one of polyglobalization.In its current phase, globalization is more decentralized, moving from a system dominated by a few global powers to a network of regional poles, big continental economies in the South and the rise of various plurinational forums. Competitive multilateralism appears to be replacing a universal one. This new phase of globalization is marked by inequality within and between countries, premature deindustrialization (with stagnation in employment) and a lack of resilience in the international system, with trade and investment lagging behind.Between 1990 and 2010, at the peak of hyperglobalization, foreign direct investment expanded sevenfold and international trade, fourfold, while access to the Internet reached 30 per cent of the world population. In 2023, the growth of global trade remained below historical levels, with trade in intangible assets and services outpacing trade in manufactured goods, which has been hovering in negative territory. Asymmetries in the gains from international trade and related problems of market concentration have played a role in exacerbating the decline in the global labour income share. Foreign Second, the United States of America, accounting for a quarter of the world economy, displayed resilience during two years of rising consumer price inflation (April 2020-June 2022). This was despite a year and a half of blanket disinflation policies (11 interest rate hikes in 18 months) and sporadic financial market disruptions. Key parts of the economy, buoyed by employment and nominal wage growth, have sustained consumption and spending. At the same time, although unemployment reached historic lows, the employment rate remains at recession levels, standing at 58 per cent of the population, and for many, wages remain very low.Third, in China, lifting of the remaining COVID-19-related restrictions helped sustain the recovery that began in 2022 and which revamped industrial production. The country's economic growth relies less on exports than in the past and the Government continues to enjoy considerable ...

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Section: Corporate Capture and The Demise Of Fiscal Policymentioning

confidence: 99%

Commodities and Development Report 2023

2023

Commodities and Development Report

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“…In our view, fi scal policy in the euro area should draw on functional fi nance principles (Mathieu and Sterdyniak, 2019;Alvarez et al, 2019;Costantini, 2020). Public finances must target economic and social objectives, both in terms of macroeconomic stabilisation and fi nancing of public spending and investments, in particular those necessary for environmental transition.…”

Section: Coordinated But Autonomous Policiesmentioning

confidence: 99%

Towards New Fiscal Rules in the Euro Area?

Mathieu

Sterdyniak

2022

Intereconomics

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“…Considering the fundamental freedoms of the internal market (people, goods, services, and capital), Europe is region in which economic globalization and its effects can be expected most clearly. For example, the common currency, the Euro, can be seen as a ‘golden straightjacket’ (a term used by Dani Rodrik in the context of the Trilemma) that prohibits Eurozone members from enacting a range of sovereign monetary, economic and social policies because they have to adhere to the rules of the European Monetary Union (Whelan, 2012, 2019, see also Beck and Prinz, 2012, Costantini, 2020). O’Rourke (2014) discusses the restrictions on national policy autonomy placed by the rules of the Eurozone in the context of Rodrik’s straightjacket.…”

Section: Operationalizationmentioning

confidence: 99%

The Dahrendorf Quandary, Crisis Severity, and Country Performance

Anheier

Filip

2021

Global Policy

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Dahrendorf´s Quandary, an early formulation of the Rodrik Trilemma, stipulates that maintaining economic competitiveness requires countries either to adopt measures detrimental to the cohesion of civil society, or to restrict civil liberties and political participation. The global financial and economic crisis of 2008–09 offers a test case for the applicability of the Quandary. We do so by examining economic, political and social stressors afflicting countries during the period of 2009–2014 relative to the severity and type of crises they experienced, and the ensuing political consequences for economy policy, democracy and society prevalent in 2019. We find that the Quandary does not apply uniformly across advanced market economies. Instead we detect distinct clusters that vary in their intensity of the tension the Quandary stipulates. We also find a consistent and positive relationship between Quandary intensity and crisis severity, yet obtain inconclusive results when looking at the relationship with current trends. The findings suggest that the crisis preparedness and the actual governance capability of countries to address the negative effects of economic globalization are key to managing the tensions inherent in the Dahrendorf Quandary and the Rodrik Trilemma.

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The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

Cited by 7 publications

References 29 publications

Commodities and Development Report 2023

Commodities and Development Report 2023

Towards New Fiscal Rules in the Euro Area?

The Dahrendorf Quandary, Crisis Severity, and Country Performance

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