Defying the 'Juncker Curse': Can Reformist Governments Be Re-elected?
AbstractEuropean policy makers, notably in the euro area, seem to take for granted that the electorate will punish them for bold reform in product and labour markets. This may explain why progress in the euro area has been comparatively limited. This paper posits and, using a dataset for 21 OECD countries, shows that this fear of electoral backlashes is unfounded, provided that financial markets work well. The mechanisms involved are relatively straightforward: well functioning financial markets "bring forward" future yields of structural reform to the present, thus permitting to overcome possible short-run costs. As a result, the electorate tend to reward, not punish, reformist governments. This has important implications for the design of structural reform packages, with financial market reforms being an essential ingredient beside product and labour market reforms.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 324.
Length: 37 pages
Date of creation: May 2008
Date of revision:
Contact details of provider:
Postal: Coomunivcations Unit, B-1049 Bruxelles / Brussels
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
Economic and Monetary Union; structural reforms; electoral cycle; financial markets; Buti; Turrini; Van den Noord; Biroli;
Other versions of this item:
- Marco Buti & Alessandro Turrini & Paul Noord & Pietro Biroli, 2009. "Defying the ‘Juncker curse’: can reformist governments be re-elected?," Empirica, Springer, vol. 36(1), pages 65-100, February.
- Biroli, Pietro & Buti, Marco & Turrini, Alessandro Antonio & Van Den Noord, Paul, 2008. "Defying the 'Juncker Curse’: Can Reformist Governments Be Re-elected?," CEPR Discussion Papers 6875, C.E.P.R. Discussion Papers.
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Romain Duval & Jørgen Elmeskov, 2005.
"The Effects of EMU on Structural Reforms in Labour and Product Markets,"
OECD Economics Department Working Papers
438, OECD Publishing.
- Duval, Romain & Elmeskov, Jørgen, 2006. "The effects of EMU on structural reforms in labour and product markets," Working Paper Series 0596, European Central Bank.
- Guido Tabellini & Alberto Alesina, 1988.
"Voting on the Budget Deficit,"
UCLA Economics Working Papers
539, UCLA Department of Economics.
- Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," Scholarly Articles 4553030, Harvard University Department of Economics.
- Alesina, Alberto F & Tabellini, Guido, 1988. "Voting on the Budget Deficit," CEPR Discussion Papers 269, C.E.P.R. Discussion Papers.
- Alberto Alesina & Guido Tabellini, 1988. "Voting on the Budget Deficit," NBER Working Papers 2759, National Bureau of Economic Research, Inc.
- Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
- Giuseppe Bertola, 2007.
"Finance and Welfare States in Globalising Markets,"
RBA Annual Conference Volume,
in: Christopher Kent & Jeremy Lawson (ed.), The Structure and Resilience of the Financial System
Reserve Bank of Australia.
- Marco Buti & Werner Rüger & Alessandro Turrini, 2009.
"Is Lisbon Far from Maastricht? Trade-offs and Complementarities between Fiscal Discipline and Structural Reforms,"
CESifo Economic Studies,
CESifo, vol. 55(1), pages 165-196, March.
- Buti, Marco & Röger, Werner & Turrini, Alessandro Antonio, 2007. "Is Lisbon far from Maastricht? Trade-offs and Complementarities between Fiscal Discipline and Structural Reforms," CEPR Discussion Papers 6204, C.E.P.R. Discussion Papers.
- Brender, Adi, 2003. "The effect of fiscal performance on local government election results in Israel: 1989-1998," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2187-2205, September.
- Adi Brender & Allan Drazen, 2004.
"Political Budget Cycles in New versus Established Democracies,"
NBER Working Papers
10539, National Bureau of Economic Research, Inc.
- Brender, Adi & Drazen, Allan, 2005. "Political budget cycles in new versus established democracies," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1271-1295, October.
- Drazen, Allan & Eslava, Marcela, 2010. "Electoral manipulation via voter-friendly spending: Theory and evidence," Journal of Development Economics, Elsevier, vol. 92(1), pages 39-52, May.
- Alesina, A. & Drazen, A., 1991.
"Why Are Stabilizations Delayed?,"
6-91, Tel Aviv - the Sackler Institute of Economic Studies.
- Jean Pisani-Ferry & Xavier Debrun & AndrÃ© Sapir, 2008. "Government Size and Output Volatility," IMF Working Papers 08/122, International Monetary Fund.
- Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 327-61, May.
- Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
- Xavier Debrun & Jean Pisani-Ferry & Andr� Sapir, 2008.
"Government size and output volatility: should we forsake automatic stabilization?,"
European Economy - Economic Papers
316, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Xavier Debrun & Jean Pisani-Ferry & AndrÃ© Sapir, 2008. "Government size and output volatility: should we forsake automatic stabilisation?," Working Papers 47, Bruegel.
- Adi Brender & Allan Drazen, 2005. "How Do Budget Deficits and Economic Growth Affect Reelection Prospects? Evidence from a Large Cross-Section of Countries," NBER Working Papers 11862, National Bureau of Economic Research, Inc.
- Poplawski Ribeiro, Marcos & Beetsma, Roel, 2008. "The political economy of structural reforms under a deficit restriction," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 179-198, March.
- Larch, Martin & van den Noord, Paul & Jonung, Lars, 2011.
"The Stability and Growth Pact: Lessons from the Great Recession,"
2011:6, Lund University, Department of Economics.
- Larch, Martin & Van den Noord, Paul & Jonung, Lars, 2010. "The stability and growth pact: lessons from the great recession," MPRA Paper 27900, University Library of Munich, Germany.
- Martin Larch & Paul van den Noord & Lars Jonung, 2010. "The Stability and Growth Pact: Lessons from the Great Recession," European Economy - Economic Papers 429, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Alberto F. Alesina & Dorian Carloni & Giampaolo Lecce, 2011.
"The Electoral Consequences of Large Fiscal Adjustments,"
NBER Working Papers
17655, National Bureau of Economic Research, Inc.
- Alberto Alesina & Dorian Carloni & Giampaolo Lecce, 2012. "The Electoral Consequences of Large Fiscal Adjustments," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 531-570 National Bureau of Economic Research, Inc.
- Paul den Noord, 2011. "Turning the page? EU fiscal consolidation in the wake of the crisis," Empirica, Springer, vol. 38(1), pages 19-51, February.
- Jacques Pelkmans & Lourdes Acedo Montoya & Alessandro Maravalle, 2008. "How product market reforms lubricate shock adjustment in the euro area," European Economy - Economic Papers 341, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Lucifora, Claudio & Moriconi, Simone, 2012. "Political Instability and Labor Market Institutions," IZA Discussion Papers 6457, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ECFIN INFO).
If references are entirely missing, you can add them using this form.