Beyond the economics of the euro - analysing the institutional evolution of EMU 1999-2010, September 2011
This Occasional Paper examines how and why the institutional framework governing EMU has evolved since the creation of the euro. Building on theories of institutionalism, the paper in particular investigates to what extent functional spillovers from the single currency into other policy domains, like macroeconomic policies or financial regulation, met with an adequate institutional response, and to what extent the existing institutional framework conditioned the response to the financial crisis. The interaction between policy requirements and institutional capabilities is examined both in “ordinary times” (1999-2007) and under “crisis conditions” (2007-10). The paper uses a typology of change which helps to put into perspective both the resilience of the institutional framework of EMU and its capacity to adapt. In this respect, it allows for a better understanding and framing of the current reforms of EMU economic governance. It concludes that even though the crisis will accelerate institutional development, it will do so only gradually, as path dependence and an inbuilt bias towards incremental change will prevent policy-makers from pursuing a “clean slate” strategy. JEL Classification: E52, E31, D84
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- Orion Lewis & Sven Steinmo, 2007. "Taking Evolution Seriously," ARENA Working Papers 19, ARENA.
- Jean Pisani-Ferry, 2010. "Euro area governance: What went wrong in the euro area? How to repair it?," Policy Contributions 410, Bruegel.
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- Salvador Barrios & Andrea Schaechter, 2008. "The quality of public finances and economic growth," European Economy - Economic Papers 337, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Lucia Quaglia & Robert Eastwood & Peter Holmes, 2009. "The Financial Turmoil and EU Policy Co-operation in 2008," Journal of Common Market Studies, Wiley Blackwell, vol. 47, pages 63-87, 09.
- Streeck, Wolfgang & Thelen, Kathleen (ed.), 2005. "Beyond Continuity: Institutional Change in Advanced Political Economies," OUP Catalogue, Oxford University Press, number 9780199280469, March.
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