EU Social Policy: Developments in the field and insights for the study of social policy. ACES Cases No. 2012.1

This paper focuses on the key features of EU social policy and the way it has been interpreted and seeks to identify new directions for study. EU social policy is considered along two main dimensions: its content and hallmark features and the main approaches to conceptualizing and theorizing it. Rather than the classic negative depiction of EU social policy, this piece suggests that it is more significant than usually allowed, not least because the empirical and theoretical lenses which have been applied to it were developed for other purposes. The implication is that developments in EU social policy are often overlooked, not least in how the EU has carved out a role for itself by constantly framing and reframing discourses relevant to social policy and social problems in an attempt to both influence how social actors at all levels of governance approach policy and secure their acceptance of its role in social policy. Therefore analyzing EU social policy outside of the traditional frames reveals interesting and significant developments especially around innovation in social policy and the attempt to legitimate the EU as a social policy actor.

Tackling barriers to trade in the Single Market. ACES Cases No. 2014.2

This paper focuses on the challenges operating in the single market due to continued persistence of regulatory barriers to trade, despite being considered one of the most integrated and successful areas of market integration. We use a unique data set on infringements to the free movement of goods to assess the types of barriers that firms encounter, their impact and variation across states and sectors, and their resolution method - through Court decisions or the pre-litigation, administrative means available within the infringement proceedings mechanism to restore compliance. We also resort to the Solvit dataset provided to the authors by the Commission to analyse some features and the effectiveness of this informal mechanism in dealing with discriminatory domestic trade and regulatory practices. We examine four key questions: What are the most problematic policy areas in terms of barriers to trade that undermine the single market? What different dispute resolution mechanisms are utilized to address trade barriers and thus improve the functioning of the single market? Under what conditions are different enforcement mechanisms and strategies more likely to be used to resolve barriers for businesses operating in the single market? How important and effective are the more informal strategies in improving market access? In doing so, our goal is to link the research on trade barriers to that of implementation and compliance to assess the diverse strategies undertaken to reduce regulatory barriers to trade.

The finance-welfare state nexus. ACES Cases No. 2013.1

At the height of the financial crisis, the Western welfare state prevented a repeat of the Great Depression. But there were also suggestions that social policy had contributed to the crisis, particularly by promoting households’ access to credit in pursuit of welfare goals. Others claim that it was the withdrawal of state welfare that led to the disaster. Against this background that motivated our interest, we propose a systematic way of assessing the relationship between financial market and public welfare provisions. We use structural vector auto-regression to establish the causal link and its direction. Two hypotheses about this relationship can be inferred from the literature. First, the notion that welfare states ‘decommodify’ livelihoods or that there is an equity-efficiency tradeoff would suggest that welfare states substitute to varying degrees for financial market offers of insurance and savings. By contrast, welfare states may support private interests selectively and/or help markets for households to function better; thus the nexus would be one of complementarity. Our empirical strategy is to spell out the causal mechanisms that can account for a substitutive or complementary relationship and then to see whether advanced econometric techniques find evidence for the existence of either of these mechanisms in six OECD countries. We find complementarity between public welfare (spending and tax subsidies) and life insurance markets for four out of our six countries, notably even for the United States. Substitution between welfare and finance is the more plausible interpretation for France and the Netherlands, which is surprising. Data availability constrains us from testing the implications for the welfare state contribution to the crisis directly but our findings suggest that the welfare state cannot generally be blamed for the financial crisis.

Focal points and fiscal discipline. ACES Cases No. 2013.2

Many studies suggest that balanced budget rules can restrain sovereign debt and lower sovereign borrowing costs, even if those rules are never enforced in court. Typically, this is explained as a result of a legal deterrence logic, in which the threat of judicial enforcement deters sovereigns from violating the rules. By contrast, we argue that balanced budget rules work by coordinating decentralized punishment of sovereigns by bond markets, rather than by posing a credible threat of judicial enforcement. Therefore, the clarity of the focal point provided by the rule, rather than the strength of its judicial enforcement mechanisms, determines its effectiveness. We develop a formal model that captures the logic of our argument, and we assess this model using data on US states. We then consider implications of our argument for the impact of the balanced budget rules recently imposed on eurozone states in the Fiscal Compact Treaty.

Germany and the Eurocrisis: The timing of politics and the politics of timing. ACES Cases No. 2014.3

This paper speculates on the future of the euro. It uses Germany as a prism for the discussion about what might be done next to bolster the Euro. Researching the future—always a challenging task—is made harder when multiple state actors contend for prominence on the basis of shifting coalitions at home, all while interacting at an international level. That said, almost everyone accepts that German choices will play the central role in the path ultimately chosen. This paper thus foregrounds Germany’s role in shaping the way ahead, and it does so through an explicitly political framework focused primarily on the electoral implausibility of an alternative German policy course.

The Euro blame game and its implications for policy and financial markets. ACES Cases No. 2012.2

The recent financial crisis in some of the eurozone member countries has received a great deal of attention by investors, policy makers and commentators alike. Often these events are interpreted as a failure of the euro and the sustainability of the eurozone is called into question. This paper shows that this analysis and its emphasis are flawed. Fiscal imbalances and financial market imperfections are at the core of the problem, and they need to be addressed directly to prevent future crises.

The Eurozone crisis and the erosion of democratic legitimacy: Lessons from the gold standard. ACES Cases No. 2013.3

This paper makes four propositions. First, it argues that the euro’s institutional design makes it function like the interwar gold exchange standard during periods of stress. Just like the gold exchange standard during the 1930s, the euro created a ‘core’ of surplus countries and a ‘periphery’ of deficit countries. The latter have to sacrifice their internal domestic economic equilibrium in order to restore their external equilibrium, and therefore have no choice but to respond to balance of payments crises by a series of deflationary spending, price and wage cuts. The paper’s second claim is that the euro’s institutional design and the EU’s response to its ‘sovereign debt crisis’ during 2010-13 deepened the recession in the Eurozone periphery, as EMU leaders focused almost exclusively on austerity measures and structural reforms and paid only lip service to the need to rebalance growth between North and South. As Barry Eichengreen argued in Golden Fetters, the rigidity of the gold standard contributed to the length and depth of the Great Depression during the 1930s, but also underscored the incompatibility of the system with legitimate national democratic government in places like Italy, Germany, and Spain, which is the basis for the paper’s third proposition: the euro crisis instigated a crisis of democratic government in Southern Europe underlining that democratic legitimacy still mainly resides within the borders of nation states. By adopting the euro, EMU member states gave up their ability to control major economic policy decisions, thereby damaging their domestic political legitimacy, which in turn dogged attempts to enact structural reforms. Evidence of the erosion of national democracy in the Eurozone periphery can be seen in the rise of anti-establishment parties, and the inability of traditional center-left and center-right parties to form stable governments and implement reforms. The paper’s fourth proposition is that the euro’s original design and the Eurozone sovereign debt crisis further widened the existing democratic deficit in the European Union, as manifested in rising anti-EU and anti-euro sentiment, as well as openly Eurosceptic political movements, not just in the euro periphery, but also increasingly in the euro core.

Debating the European debt crisis: Government leadership, party ideology and supranational integration as focal points of parliamentary debates in Austria, Germany and the United Kingdom. ACES Cases No. 2012.3

Parliamentary debates about the resolution of the EU debt crisis seem to provide a good example for the frequently assumed “politicizationˮ of European governance. Against this background, the paper argues that in order to make sense of this assumption, a clearer differentiation of three thematic focal points of controversies – with regard to the assessment of government leadership, concerning the debate between competing party ideologies within the left/right dimension, and with regard to the assessment of supranational integration – is needed. Applying this threefold distinction, the paper uses a theory of differential Europeanization to explain differences in the thematic structure of debates in the Austrian Nationalrat, the British House of Commons, and the German Bundestag. Empirically, the paper is based on data gained from the computer-based coding of plenary debates about the resolution of the European debt crisis between 2010 and 2011.

The Malleable Politics of Welfare-to-Work Reform: Germany's "Hartz" activation compared with Dutch, British and Irish cases. ACES Cases No. 2009.1

We compare the Hartz reforms in Germany with three other major labor market activation reforms carried out by center-left governments. Britain and Germany developed radically neoliberal “mandatory” activation policies, whereas in the Netherlands and Ireland radical activation change took a very different “enabling” form. The Irish and German cases were path deviant, the British and Dutch path dependent. We explain why Germany underwent “mandatory” and path deviant activation by focusing on two features of the policy discourse. First, the elite level discourse was “ensilaged” sealing policy formation off from dissenting actors. This is what the British and German cases had in common and the result was reform that identified long term unemployment as social delinquency rather than market failure. Second, although the German policy-making system lacked the “authoritative” features that facilitated reform in the British case, and the Irish policy-making system lacked the “reflexive” mechanisms that facilitated reform in the Dutch case, in both Germany and Ireland the wider legitimating discourses were reshaped by novel institutional vehicles (the Hartz Commission and FÁS) that served to fundamentally alter system-constitutive perceptions about policy. The findings suggest that major reform of welfare-to-work policy may be much more malleable than previously thought.

One money with several cycles? Evaluation of European business cycles using cluster analysis. ACES Cases No. 2009.3

Optimal currency area theory suggests that business cycle comovement is a sufficient condition for monetary union, particularly if there are low levels of labour mobility between potential members of the monetary union. Previous studies of co-movement of business cycle variables (mainly authored by Artis and Zhang in the late 1990s) found that there was a core of member states in the EU that could be grouped together as having similar business cycle comovements, but these studies always used Germany as the country against which to compare. In this study, the analysis of Artis and Zhang is extended and updated but correlating against both German and euro area macroeconomic aggregates and using more recent techniques in cluster analysis, namely model-based clustering techniques.

Measuring the intermittent synchronicity of macroeconomic growth in Europe. ACES Cases No. 2010.1

Synchronization of growth rates are an important feature of international business cycles, particularly in relation to regional integration projects such as the single currency in Europe. Synchronization of growth rates clearly enhances the effectiveness of European Central Bank monetary policy, ensuring that policy changes are attuned to the dynamics of growth and business cycles in the majority of member states. In this paper a dissimilarity metric is constructed by measuring the topological differences between the GDP growth patterns in recurrence plots for individual countries. The results show that synchronization of growth rates were higher among the Euro area member states during the second half of the 1980s and from 1997 to roughly 2002. Apart from these two time periods, Euro area member states do not appear to be more synchronized than a group of major international countries, signifying that globalization was the major cause of international business cycle synchronization.

British business and the Euro. ACES Cases No. 2008.2

During the Maastricht Treaty negotiations, the United Kingdom obtained an opt-out option on Economic and Monetary Union (EMU). When Tony Blair came to power, he promised there would be a referendum on the euro if the government decided it was in the national interest to join. Many believed Tony Blair intended to call and try to win a referendum on the euro. Therefore, in the late 1990s, the debate over the euro raged in Britain, filling the pages of the tabloids and the minds of many Britons. In this paper based on empirical research conducted in London in 2005-06, I investigate whether the business sector had a clear preference on the issue of British membership in the EMU and tried to influence the government‟s decision. I use Jeffry Frieden's model of interest group preferences regarding exchange-rate policies to develop hypotheses regarding the position of the business sector on the euro. Research findings reveal that the business sector was divided on the issue of euro membership exactly as Frieden's model predicts. However, the intensity of business preferences decreased overtime. By the end of Tony Blair's second term, the business sector had become neutral on the issue of the euro.

Political economy of the Agenda 2010 reforms: How Gerhard Schröder overcame the "blocked republic". ACES Cases No. 2008.3

This essay will show that the Schröder-led government managed to break the political gridlock and introduce the Agenda 2010 because key institutional structures of Germany‟s political economy had lost their obstructive powers. In other words, the formerly semi-sovereign state had reclaimed its sovereignty. To understand how this happened, Peter Katzenstein's concept of the semi-sovereign state is first explored as a framework through which to analyze economic policy continuity and change. Within this framework, the causes for constant reform inertia between 1982 and 2002, in spite of varying political constellations and changes in the country‟s economic structure, are then discussed. This analysis will demonstrate that the Agenda 2010 reforms are predominantly a result of underlying incremental change in the political economy and its effect on the political decision-making process. Finally, the findings of this analysis are summarized and discussed with the aim of better understanding the economic policies of the current grand coalition government of the CDU/CSU and the SPD government under Chancellor Angela Merkel.

Ideas and Policy: The European Union considers social policy futures. ACES Cases No. 2010.2

The European Union’s social policy perspectives have changed quite dramatically over the last several decades. Now EU’s social policy discourse often promises to “invest in people,” sometimes “to invest in children,” and always to pay particular attention to youth. This paper argues that the tools of historical institutionalism can lead to understanding the ideational roots of this social investment perspective so distant from the “European social model.” Coming out of social movements, and with collective identities shaped both by those movement roots and national experiences, activists have effectively focused their practices on altering the social representations of European social solidarity through their interest group interventions, their participation in policy forums, and their mobilization within civil society at the European and sub-European levels. They have been able to make common cause with several epistemic communities that themselves revamped their ideas in the face of new institutional constraints, in order to advance their interests in promoting particular directions for social policy. The paper documents that “ideas” are not a variable and discourse “sometimes important” but that the ideas carried by movements and in epistemic communities are integral to the very definition of their interests that they promote within and with institutions.

From Convergence to Diffusion: The EU's influence on national tax systems. ACES Cases No. 2011.2

In this article I investigate to what extent European Integration stimulates policy convergence and diffusion of various forms of tax policy. Using a mixed-methods design, I find that several causal mechanisms contribute to an EU-wide diffusion of tax policies: imposition, competition, harmonization and learning/communication. I show that these mechanisms have different effects on different forms of taxation. Even if the ultimate outcome of this influence only in few cases leads to unconditional convergence, the EU has markedly accelerated policy diffusion among its member states.