Economic Policy Voting and Incumbency: Unemployment in Western Europe

The economic voting literature has been dominated by the incumbency-oriented hypothesis, where voters reward or punish government at the ballot box according to economic performance. The alternative, policy-oriented hypothesis, where voters favor parties closest to their issue position, has been neglected in this literature. We explore policy voting with respect to an archetypal economic policy issue – unemployment. Voters who favor lower unemployment should tend to vote for left parties, since they “own” the issue. Examining a large time-series cross-sectional (TSCS) pool of Western European nations, we find some evidence for economic policy voting. However, it exists in a form conditioned by incumbency. According to varied tests, left incumbents actually experience a net electoral cost, if the unemployment rate climbs under their regime. Incumbency, then, serves to break any natural economic policy advantage that might accrue to the left due to the unemployment issue.

Baker Viewpoint: Curtailment Mortgages are a Win-Win Economic Policy

What happens if you prepay your standard residential mortgage? This question puzzles most people, and worse yet the answer can be even more confusing. However, a minor policy change that alters how prepayments are applied could benefit mortgage borrowers as well as the overall housing market.

On the effectiveness and legitimacy of EU economic policies. Bruegel Policy Brief 2012/04, 9 November 2012

For markets, European economic governance faces a crisis of policy effectiveness, while for citizens the European Union faces a democratic legitimacy crisis. The introduction of the European Semester economic policy surveillance system has not resolved these problems. Policy guidance deriving from the Semester is not focused enough on areas of significant spillovers and on problem countries, and national compliance is often procedural rather than actual. This brings into question both the Semester’s effectiveness and the democratic legitimacy of the EU’s new intervention rights, which allow intrusion into national policy-making.

The Regional Development Policy of Thailand and Its Economic Cooperation with Neighboring Countries

Thailand has recently strengthened its economic policy toward its neighboring countries in coordination with domestic regional development. It is widely recognized that economic cooperation with neighboring countries is essential in preventing the inflow of illegal labor and effectively utilizing labor and resources through the relocation of production bases. This direction is strengthened by elaborating the GMS-EC and the ECS (Economic Cooperation Strategy). In addition, economic dependency of the neighboring countries on Thailand is generally high. In this report, firstly, Thai regional development policy will be made clear in relation to its economic policy toward neighboring countries as well as the status quo of the industrial estates. Secondly, Thai policy toward the neighboring countries is examined referring to the concept of wide-ranging economic zones, regional economic cooperation and special border economic zones. Thirdly, the paper will discuss how closely the economies between Thailand and the neighboring countries are related through trade and investment. Lastly, some implications on Japan's economic cooperation will also be explored.

Post-Crisis Economic Reform in Indonesia:Policy for Intervening in Ownership in Historical Perspective

Introduction : Economic reform in Indonesia after the Asian currency crisis is often discussed in parallel with Thailand and South Korea, which were alike hit by the crisis. It should however be noted that what happened in Indonesia was a change of political regime from authoritarianism to democracy, not just a change of government as seen in Thailand and South Korea. Indonesia’s post-crisis reform should be understood in the context of dismantling of the Soeharto regime to seek a new democratic state system. 　　　In the political sphere, dramatic institutional changes have occurred since the downfall of the Soeharto government in May 1998. In comparison, changes in the economic sphere are more complex than the political changes, as the former involve at least three aspects. The first is the continuity in the basic framework of capitalist system with policy orientation toward economic liberalization. In this framework, the policies to overcome the crisis are continued from the last period of the Soeharto rule, under the support system of IMF and CGI (Consultative Group on Indonesia). The second aspect is the impact of the political regime change on the economic structure. It is considered that the structure of economic vested interests of the Soeharto regime is being disintegrated as the regime breaks down. The third aspect is the impact of the political regime change on economic policy-making process. The process of formulating and implementing policies has changed drastically from the Soeharto time. With these three aspects simultaneously at work, it is not so easy to identify which of them is the main cause for a given specific economic phenomenon emerging in Indonesia today. 　　　Keeping this difficulty in mind, this paper attempts to situate the post-crisis economic reform in the broader context of the historical development of Indonesian economic policies and their achievements. We focus in particular on the reform policies for banking and corporate sectors and resulting structural changes in these sectors. This paper aims at understanding the significance of the changes in the economic ownership structure that are occurring in the post-Soeharto Indonesia. Economic policies here do not mean macro economic policies, such as fiscal, financial and trade policies, but refer to micro economic policies whereby the government intervenes in the economic ownership structure. In Section 1, we clarify why economic policies for intervening in the ownership structure are important in understanding Indonesia. Section 2 follows the historical development of Indonesia’s economic policies as specified above, throughout the four successive periods since Indonesia’s independence, namely, the parliamentary democracy period, the Guided Democracy period under Soekarno, the Soeharto-regime consolidation period, and the Soeharto-regime transfiguration period2. Then we observe what economic ownership structure was at work in the pre-crisis last days of the Soeharto rule as an outcome of the economic policies. In Section 3, we examine what structural changes have taken place in the banking and corporate sectors due to the reform policies in the post-crisis and post-Soeharto Indonesia. Lastly in Section 4, we interpret the current reorganization of the economic ownership in the context of the historical transition of the ownership structure, taking account of the changes in the policy-making processes under democratization.

EPC Special Collection. Juncker’s Investment Package: essential background reading, 27 November 2014. Collection of papers recently published by the European Policy Centre reflecting on current social, political and economic affairs

This special collection combines the latest publications written by our experts on Europe's investment future. In chronological order, this package follows the developments of how European investment has been dealt with, and what would be needed to make for a more ambitious plan.

Exchange Rate Policy and Economic Growth after the Financial Crisis in Central and Eastern Europe

In a paper on the effects of the global financial crisis in Central and Eastern Europe (CEE), the author reacts to a paper of Åslund (2011) published in the same issue of Eurasian Geography and Economics on the influence of exchange rate policies on the region’s recovery. The author argues that post-crisis corrections in current account deficits in CEE countries do not in themselves signal a return to steady economic growth. Disagreeing with Åslund over the role of loose monetary policy in fostering the region’s economic problems, he outlines a number of competitiveness problems that remain to be addressed in the 10 new EU member states of CEE, along with improvements in framework conditions supporting future macroeconomic growth.