The Political Economy of Adjustment Throughout and Beyond the Eurozone Crisis: What Have We Learned?

271 Pages·2019·4.386 MB·English

by  Michele Chang (editor), Federico Steinberg (editor), Francisco Torres (editor)

The Political Economy of Adjustment
Throughout and Beyond the
Eurozone Crisis
This volume focuses on the aftermath of the euro crisis and whether the reforms
have brought about lasting changes to the economic and political structures of
the crisis countries, or if the changes were short- term and easily abandoned post-
bailout and post-r ecovery.
Starting with an analysis of the state of euro area governance at the onset of
the crisis and the ensuing reforms, the book considers structural conditions as
well as those specific to the domestic political economy of most of the countries
affected by the crisis, including Greece, Ireland, Portugal, Spain and Italy. It
presents up- to-date and incisive analysis of the aftermath of the crisis and sug-
gests how we can situate it within our understanding of different national growth
models in Europe.
This book will be of key interest to scholars, students and practitioners inter-
ested in the euro crisis, Economic and Monetary Union, European Union and
European Politics, and more broadly in Comparative Politics, Political Economy,
International Relations, Economics, Finance, Business and Industry.
Michele Chang is Professor of European Political and Governance Studies at
the College of Europe.
Federico Steinberg is Senior Analyst at the Elcano Royal Institute and Lecturer
of Political Economy at Madrid’s Universidad Autónoma.
Francisco Torres is Visiting Professor of European Political Economy at
Católica Lisbon School of Business and Economics and has been a Visiting
Senior Fellow at the LSE since 2014 and PEFM Associate at St Antony’s
College, Oxford University, since 2012.
Routledge/UACES Contemporary European Studies
The primary objective of the new Contemporary European Studies series is to
provide a research outlet for scholars of European Studies from all disciplines.
The series publishes important scholarly works and aims to forge for itself an
international reputation.
Series editors: Chad Damro, University of Edinburgh, UK, Elaine Fahey, City
University London, UK, and David Howarth, University of Luxembourg,
Luxembourg, on behalf of the University Association for Contemporary European
Studies.
Editorial Board: Grainne De Búrca, European University Institute and Columbia
University; Andreas Føllesdal, Norwegian Centre for Human Rights, University
of Oslo; Peter Holmes, University of Sussex; Liesbet Hooghe, University of
North Carolina at Chapel Hill, and Vrije Universiteit Amsterdam; David
Phinnemore, Queen’s University Belfast; Ben Rosamond, University of Warwick;
Vivien Ann Schmidt, University of Boston; Jo Shaw, University of Edinburgh;
Mike Smith, University of Loughborough and Loukas Tsoukalis, ELIAMEP,
University of Athens and European University Institute.
Competitiveness and Solidarity in the European Union
Interdisciplinary Perspectives
Edited by Paolo Chiocchetti and Frédéric Allemand
Changing Borders in Europe
Exploring the Dynamics of Integration, Differentiation and Self-Determination
in the European Union
Edited by Jacint Jordana, Michael Keating, Axel Marx and Jan Wouters
Citizenship, Nation-building and Identity in the EU
The Contribution of Erasmus Student Mobility
Cherry James
The Informal Construction of Europe
Edited by Lennaert van Heumen and Mechthild Roos
Refugees, Security and the European Union
Sarah Léonard and Christian Kaunert
The Political Economy of Adjustment Throughout and Beyond the
Eurozone Crisis
What Have We Learned?
Edited by Michele Chang, Federico Steinberg and Francisco Torres
Differentiated Integration and Disintegration in a Post-Brexit Era
Edited by Stefan Gänzle, Benjamin Leruth and Jarle Trondal
The Political Economy of
Adjustment Throughout and
Beyond the Eurozone Crisis
What Have We Learned?
Edited by
Michele Chang,
Federico Steinberg and
Francisco Torres
First published 2020
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
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Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 selection and editorial matter, Michele Chang, Federico Steinberg
and Francisco Torres; individual chapters, the contributors
The right of Michele Chang, Federico Steinberg and Francisco Torres to
be identified as the authors of the editorial material, and of the authors for
their individual chapters, has been asserted in accordance with sections 77
and 78 of the Copyright, Designs and Patents Act 1988.
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ISBN: 978-1-138-38615-0 (hbk)
ISBN: 978-0-429-42694-0 (ebk)
Typeset in Times New Roman
by Wearset Ltd, Boldon, Tyne and Wear
Contents
List of figures vii
List of tables viii
List of boxes ix
Notes on contributors x
Preface by Paul De Grauwe xvi
Acknowledgments xx
List of abbreviations xxi
1 After the bailout: 10 years of the euro area crisis 1
MICHELE CHANG, FEDERICO STEINBERG AND
FRANCISCO TORRES
PART I
The European dimension of the crisis 15
2 The euro crisis: its unresolved roots and their reform
implications 17
G. RUSSELL KINCAID
3 When numbers don’t add up: bureaucratic culture and
conflicts in EU–IMF programs 38
SUSANNE LüTz, SVEN HILGERS AND
SEBASTIAN SCHNEIDER
PART II
Country studies 59
4 Greece after the bailouts: assessment of a qualified failure 61
GEORGE PAGOULATOS
vi Contents
5 Ireland: back to a different normal 94
KEVIN CARDIFF
6 Portugal’s adjustment program: the run-u p to the sovereign
debt crisis, program design, implementation and legacy 122
FRANCISCO TORRES AND MIGUEL LEBRE DE FREITAS
7 Using a sectoral bailout to make wide reforms:
the case of Spain 157
SEBASTIÁN ROYO AND FEDERICO STEINBERG
8 Italy: missed adjustments and political nemesis 181
SILVIA MERLER
PART III
National growth models and the political economy of
adjustment 205
9 Unity in diversity? Varieties of capitalism before
and after the euro crisis 207
BENEDICTA MARzINOTTO
10 Conclusion: the political economy of adjustment 229
MICHELE CHANG, FEDERICO STEINBERG
AND FRANCISCO TORRES
Index 238
Figures
1.1 Deficit to GDP levels of Greece, Ireland, Italy, Portugal and
Spain and the euro area (17) average 4
1.2 Debt to GDP ratio of Greece, Ireland, Italy, Portugal and
Spain and the euro area average, 1999–2017 5
1.3 Current account balance as a percentage of GDP 6
1.4 Annual percentage change in nominal unit labor costs,
1999–2017 6
1.5 Annual inflation rate (measured by rate of change of HICP) for
euro area 18, Greece, Ireland, Italy, Portugal and Spain,
1999–2017 7
4.1 Fiscal measures and outcomes 79
8.1 (a) Long- term real interest rates (%); (b) bank credit to private
sector (% GDP) in Italy. 183
8.2 (a) Current account (% GDP); (b) bank credit to private sector
(% GDP) in Italy 184
8.3 (a) Government deficit (% GDP); (b) government debt (% GDP)
in Italy 185
8.4 (a) Banks’ return on equity (ROE); (b) REER unit labor costs
(EU 15) in Italy 196
8.5 (a) Youth unemployment rate; (b) youth unemployment rate
duration in Italy 198
8.6 (a) Real per capita GDP ; (b) change in the GINI coefficient in
Italy 199
9.1 Macro- financial systems and varieties of capitalism,
1980–2015 216
9.2 Income inequality and varieties of capitalism, 1980–2015 218
9.3 Wage- setting systems and varieties of capitalism, 1980–2015 221
Tables
1.1 Varieties of capitalism traits 3
2.1 ECB asset purchase program, December 2018 26
3.1 Approaches of troika bureaucracies on loan conditionalities 52
4.1 Economic indicators for Greece 2001–07 65
4.2 Greece bailout programs 70
4.3 Economic indicators for Greece 2008–17 82
4.4 Competitiveness and inequality measurements 2008–17 86
5.1 Economic indicators for Ireland 2001–2007 97
5.2 Economic indicators for Ireland 2008–2018 101
5.3 Some competitiveness indicators for Ireland 102
5.4 Inequality measures for Ireland 112
5.5 Modified gross national income (GNI*) for Ireland 115
6.1 Portuguese macroeconomic indicators, 1995–2007 (boom
and slump) 126
6.2 Portuguese macroeconomic indicators, 2007–2018 (the crises,
the program and PPS) 136
6.3 Portuguese competitiveness indicators, 2008–2018 142
6.4 Inequality, unemployment by category and emigration,
Portugal 2008–2017 144
7.1 The boom years in Spain (2000–07) 160
7.2 The economic crisis in Spain (2008–17) 167
7.3 Inequality, poverty, and unemployment in Spain 171
7.4 Competitiveness indicators in Spain 175
9.1 Varieties of capitalism before and after the crisis 223
10.1 Summary of case studies 232
Boxes
5.1 Economic adjustment program for Ireland – summary of
elements 105
6.1 The economic adjustment program 130
6.2 Constitutional court reversals of cost-c utting and
flexibilization measures (13 out of 494 measures) 133
7.1 Financial sector assistance program of Spain 164