Assessing disproportionality: indexes of policy responses to the 2007–2008 banking crisis

Contemporary theories of the policy process typically assume that policy responses tend to go through long periods of stasis alternated with occasional bursts of intense activity. The concept of policy punctuations has been put forward to denote large-scale changes in public policies that take place in crisis moments. However, research on the dynamics of policy overreaction and underreaction is still in its infancy. It has mostly focused on either small-n cross-sectional analysis of government spending or case studies of single events. A comparative assessment of the extent of disproportionate responses in a crisis is still lacking. To fill this gap, in this paper we develop a framework to conceptualize, operationalize, and ultimately assess disproportionate policy responses systematically from a cross-sectional perspective. We create a series of indexes to measure policy over- and underreactions among the EU member states that experienced the 2007–2008 banking crisis. We found that a large majority of EU countries overreacted through public liability guarantee and budget commitment. On the other hand, regulatory responses are characterized by a greater variation.