The political economy of the euro area's sovereign debt crisis: introduction to the special issue of the<i>Review of International Political Economy</i>

Howarth, David; Quaglia, Lucia

doi:10.1080/09692290.2015.1024707

Cited by 20 publications

(4 citation statements)

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“…The member states have devised a series of Eurozone-wide mechanisms to attempt to address the fallout of the crisis, and avoid a recurrence. Every step of the way has been controversial (Howarth & Quaglia 2015). have enhanced sovereign debt markets more generally, adding to their depth and liquidity.…”

Section: Conflicts About How To Reform the Eurozonementioning

confidence: 99%

Understanding the Political Economy of the Eurozone Crisis

Frieden

Walter

2017

Annu. Rev. Polit. Sci.

176

121

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The Eurozone crisis constitutes a grave challenge to European integration. This essay presents an overview of the causes of the crisis, and analyzes why has it been so difficult to resolve. It focuses on how responses to the crisis were shaped by distributive conflicts both among and within countries. On the international level, debtor and creditor countries have fought over the distribution of responsibility for the accumulated debt; countries with current account surpluses and deficits have fought over who should implement the policies necessary to reduce the current account imbalances. Within countries, interest groups have fought to shift the costs of crisis resolution away from themselves. The essay emphasizes that the Eurozone crisis shares many features of previous debt and balance-of-payments crises. However, the Eurozone's predicament is unique because it is set within a monetary union that strongly constrains the policy options available to policymakers, and vastly increases the interdependence of the euro crisis countries on each other. The outcome of the crisis has been highly unusual, because the costs of resolving the crisis have been borne almost exclusively by the debtor countries and taxpayers in the Eurozone.2

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Section: Conflicts About How To Reform the Eurozonementioning

confidence: 99%

Understanding the Political Economy of the Eurozone Crisis

Frieden

Walter

2017

Annu. Rev. Polit. Sci.

176

121

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“…This outcome contradicted the market-discipline hypothesis, as Hungary was able to sell bonds at relatively low interest rates despite its inconsistent and unorthodox policy measures during the crisis period (Howarth -Quaglia 2015). With a series of successful bond sales, the incentive to seek emergency financing diminished, and the IMF withdrew from negotiations in July of 2012, with Hungary capable of fulfilling its own needs despite continued breakdowns elsewhere in the EU.…”

Section: Case Study -Hungarymentioning

confidence: 98%

“…Likewise, rating agencies granted high credit ratings to the Eurozone member states, even to those economies like Greece with questionable underlying fiscal fundamentals. Howarth -Quaglia (2015) read this as evidence that markets were not fully convinced of the inviolability of the "no-bailout clause" and were in fact expecting a full bailout by the ECB should any of the Eurozone economies become insolvent. Any such assumptions were put to the test in the European sovereign debt crises beginning in 2009, most strongly so by the Greek case.…”

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confidence: 99%

Fiscal Sovereignty under EU Crisis Management: A Comparison of Greece and Hungary

Kramer

2019

Acta Oeconomica

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This article concerns the changing conditions of fiscal sovereignty within the Eurozone in the context of the evolution of the EU's institutional crisis-management framework during the recent financial crisis. It begins with a method-of-difference approach to compare the dynamics and outcomes of the crisis in the Greek and Hungarian economies, on the basis of their similarly troubled fiscal positions and domestic political environments. On this basis, an argument is made that the outcomes in Greece (i.e. a breakdown in national fiscal sovereignty and severe economic losses) were not an inevitable product of the economic fundamentals, but at least partially attributable to uncertainty about the extent and expedience of financial assistance through the Eurozone's crises management institutions. The European Central Bank's (ECB) 2012 declaration of “unlimited support” for Eurozone governments has done much to calm markets, but has also created an institution with an ambiguous and self-imposed “dual-mandate”. This article concludes that the precedent established by the last crisis has created a fraught situation, leaving the Eurozone without viable options that are both economically efficacious and politically legitimate. Relying on either the ECB or the European Stability Mechanism to manage any future crisis could well provoke a backlash among the Eurozone member states as national fiscal sovereignty is eclipsed by ever-deeper ad hoc financial commitments on the part of the institutions of crisis management.

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“…Surplus countries generally supported reforms that would require more fiscal discipline, whereas deficit countries were in favor of designing European-level schemes in ways that would result in fiscal transfers. States leveraged both their bargaining power and (often self-serving) ideas to support their preferred positions (Blyth 2013;Bulmer 2014;Dyson 2010Dyson , 2017Howarth and Quaglia 2015;Matthijs and McNamara 2015;Moschella 2017;Schimmelfennig 2015).…”

Section: A Short Primer On the Eurozone Crisismentioning

confidence: 99%

The Politics of Bad Options

Walter

Ray

Redeker

2020

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Why did the Eurozone crisis prove to be so difficult to resolve? Why was it resolved in a manner in which some countries bore a much larger share of the pain than other countries? Why did no country leave the Eurozone rather than implement unprecedented austerity? Who supported and who opposed the different policy options in the crisis domestically, and how did the distributive struggles among these groups shape crisis politics? Building on macro-level statistical data, original survey data from interest groups, and qualitative comparative case studies, this book argues and shows that the answers to these questions revolve around distributive struggles about how the costs of the Eurozone crisis should be divided among countries, and among different socioeconomic groups within countries. Together with divergent but strongly held ideas about the “right way” to conduct economic policy and asymmetries in the distribution of power among actors, severe distributive concerns of important actors lie at the root of the difficulties of resolving the Eurozone crisis as well as the difficulties to substantially reform European Monetary Union (EMU). The book provides new insights into the politics of the Eurozone crisis by emphasizing three perspectives that have received scant attention in existing research: A comparative perspective on the Eurozone crisis by systematically comparing it to previous financial crises, an analysis of the whole range of policy options, including the ones not chosen, and a unified framework that examines crisis politics not just in deficit-debtor, but also in surplus-creditor countries.

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The political economy of the euro area's sovereign debt crisis: introduction to the special issue of theReview of International Political Economy

Abstract: Abstract

Cited by 20 publications

References 74 publications

Understanding the Political Economy of the Eurozone Crisis

Understanding the Political Economy of the Eurozone Crisis

Fiscal Sovereignty under EU Crisis Management: A Comparison of Greece and Hungary

The Politics of Bad Options

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