Defying the 'Juncker Curse': Can Reformist Governments Be Re-elected?
European 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.
|Date of creation:||May 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Inter-institutional relations and communication Unit, B-1049 Brussels|
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
References listed on IDEAS
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.:
- 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.
- 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.
- 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.
- Alesina, Alberto & Drazen, Allan, 1991.
"Why Are Stabilizations Delayed?,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1170-88, December.
- 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.
- 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.
- André Sapir & Xavier Debrun, 2010.
"Government Size and Output Volatility: Should We Forsake Automatic Stabilization ?,"
ULB Institutional Repository
2013/174323, ULB -- Universite Libre de Bruxelles.
- Xavier Debrun & Jean Pisani-Ferry & André Sapir, 2008. "Government size and output volatility: should we forsake automatic stabilisation?," Working Papers 47, Bruegel.
- Xavier Debrun & Jean Pisani-Ferry & André Sapir, 2008. "Government size and output volatility: should we forsake automatic stabilization?," European Economy - Economic Papers 2008 - 2015 316, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Jean Pisani-Ferry & Xavier Debrun & AndrÃ© Sapir, 2008. "Government Size and Output Volatility; Should We Forsake Automatic Stabilization?," IMF Working Papers 08/122, International Monetary Fund.
- Bertola, Giuseppe, 2007.
"Finance and Welfare States in Globalizing Markets,"
CEPR Discussion Papers
6480, C.E.P.R. Discussion Papers.
- 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.
- Sam Peltzman, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 327-361.
- 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.
- 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.
- Adi Brender & Allan Drazen, 2004. "Political Budget Cycles in New versus Established Democracies," NBER Working Papers 10539, National Bureau of Economic Research, Inc.
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:euf:ecopap:0324. See general information about how to correct material in RePEc.
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.