Thesis, David Bokhorst Traces the Implementation Process of Di�Ferent Recommendations in Belgium, Italy, France, the Netherlands, and Germany
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UvA-DARE (Digital Academic Repository) Governing imbalances in the economic and monetary union A political economy analysis of the macroeconomic imbalance procedure Bokhorst, D.J. Publication date 2019 Document Version Final published version License Other Link to publication Citation for published version (APA): Bokhorst, D. J. (2019). Governing imbalances in the economic and monetary union: A political economy analysis of the macroeconomic imbalance procedure. General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulations If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: https://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl) Download date:06 Oct 2021 How Can the euro area protect itself from future economic Crisis? The framework governing the euro has been significantly expanded in recent years. Among the key innovations is the Macroeconomic Imbalance Procedure (MIP), whereby the voor de openbare verdediging EU monitors economic vulnerabilities among Member States and issues policy van het proefschri�t recommendations to address them. In this thesis, David Bokhorst traces the implementation process of di�ferent recommendations in Belgium, Italy, France, the Netherlands, and Germany. He presents a holistic assessment of how the MIP works in practice and analyses the e�fects it has on policymaking in the Member States. David Bokhorst is a political scientist by training. He has studied the process of European integration ever since he became involved with the European Youth Parliament as a teenager. A�ter his studies, David worked in public a�fairs in Brussels, as a teacher at Tilburg University and as a researcher at the Clingendael door Institute. A�ter finishing the PhD he became an EU-advisor for the committee on Finance in the Dutch national parliament, but remained a�filiated to the University of Amsterdam. op 24 mei 2019 om 12.oo uur in de Agnietenkapel Oudezijds Voorburgwal 231 1012 EZ Amsterdam Governing Imbalances in the Economic and Monetary Union A Political Economy Analysis of the Macroeconomic Imbalance Procedure ACADEMISCH PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Universiteit van Amsterdam op gezag van de Rector Magnifcus prof. dr. ir. K.I.J. Maex ten overstaan van een door het College voor Promoties ingestelde commissie, in het openbaar te verdedigen in de Agnietenkapel op vrijdag 24 mei 2019, te 12.00 uur door David Jonas Bokhorst geboren te Apeldoorn Promotiecommissie Promotores: prof. dr. J.H. Zeitlin Universiteit van Amsterdam prof. dr. D.K. Mügge Universiteit van Amsterdam Overige leden: prof. dr. E. Jones Johns Hopkins SAIS prof. dr. A.C. Verdun Universiteit Leiden prof. dr. F.I.G. Vandenbroucke Universiteit van Amsterdam prof. dr. B.M. Burgoon Universiteit van Amsterdam prof. dr. J.A. Vijlbrief Universiteit van Amsterdam Faculteit der Maatschappij- en Gedragswetenschappen © 2019 D. J. Bokhorst ([email protected]) Governing Imbalances in the Economic and Monetary Union A Political Economy Analysis of the Macroeconomic Imbalance Procedure All rights reserved. No part of this thesis may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the author or copyright holding journal. ISBN: 978-94-028-1506-1 Layout and cover design: Sarah Famke Oortgijsen Tis research received support from the EU’s Horizon 2020 Research and Innovation Framework Programme, under grant agreement number REP-649456-1 titled ‘European legitimacy in governing through hard times: the role of European networks’ (ENLIGHTEN, http://enlightenproject.eu). Table of Contents Acknowledgements 11 Chapter 1: Debating the MIP 13 1.1. A general introduction: why should we study the MIP? 13 1.2 The debate on governance 18 1.3 The debate on effectiveness and future evolution 22 1.4 The debate on content 29 1.5 Research focus 31 Chapter 2: Analysing the MIP 35 2.1 Research questions and conceptualisation 35 2.2 Research strategy 44 2.3 Case selection 50 2.4 Summary 53 Part I: Horizontal Analysis 55 Chapter 3: The origin and evolution of the MIP 57 3.1 The rise of imbalances in the EMU 57 3.2 The perceived need for strengthened economic surveillance 63 3.3 Designing the MIP 66 3.4 From a rigid to an interactive approach 68 3.4 A political approach 72 3.5 Conclusion 77 Chapter 4: The governance of the MIP 79 4.1 Introduction 79 4.2 How does the MIP function on paper? 80 4.2.1 The purpose of the MIP 80 4.2.2 The annual cycle of the MIP 82 4.2.3 The Excessive Imbalance Procedure and the likelihood of sanctions 84 4.2.4 Alternative compliance mechanisms 93 4.3 Institutional setting 95 4.3.1 Which actors are involved in the MIP? 95 4.3.2 Inside the Council: tools, tasks, and tensions 98 4.4 Conclusion 103 Chapter 5: Scope and content of the MIP 105 5.1 Introduction 105 5.2 Scope and content: an overview 106 5.3 Has the MIP become overextended? 113 5.4 Does the MIP have an ideological direction? 118 5.5 Conclusion 124 Part II: In-Depth Case Studies 125 Chapter 6: Wage Indexation in BelgiuM 127 6.1 Introduction 127 6.2 Belgian wages as a macroeconomic imbalance 129 6.3 The practice of wage indexation and domestic debate 136 6.4 Tracing the process: the Di Rupo government 141 6.5 Tracing the process II: the Michel government 149 6.6 Analysis: the continued controversy over the role of wages in EMU 155 6.7 Conclusion 160 Chapter 7: The Liberalisation of Professional Services in Italy 161 7.1 Introduction 161 7.2 Italy’s high debt/low growth imbalance 163 7.3 Professional orders and pre-crisis reform 167 7.4 Tracing the process I: from Berlusconi to Monti 171 7.5 Tracing the process II: from Letta to Renzi 179 7.6 Analysing the role of the MIP 185 7.7 Conclusion 194 Chapter 8: Labour Market Segmentation in France 197 8.1 Introduction 197 8.2 Imbalances in the French economy and the link with EPL 198 8.3 The issue of segmentation and pre-crisis reform 204 8.4 Tracing the process: the continuation of French-style flexicurity 210 8.5 France and the MIP 218 8.6 Conclusion 225 Chapter 9: The Dutch Housing Market 229 9.1 Introduction 229 9.2 The housing market as a macroeconomic imbalance 231 9.3 A political debate in deadlock 237 9.4 The Dutch housing market and the MIP 243 9.4.1 The MIP came late 243 9.4.2 Why the Commission believed the reform was not suffcient 245 9.4.3 The absence of a direct effect 247 9.4.4 The MIP as one voice among many 251 9.5 Analysis and conclusion 254 Chapter 10: The German Current Account Surplus 259 10.1 Introduction 259 10.2 The current account position as an ambiguous indicator 261 10.3 Is the surplus distortive for the EMU? Three narratives and their limitations. 264 10.3.1 The competitiveness narrative 264 10.3.2 The creditor nation narrative 267 10.3.3 The narrative of a demand and investment defcit 272 10.4 Germany under MIP surveillance 278 10.4.1 The MIP as agenda setter 278 10.4.2 The investment gap and associated policy responses 282 10.5 Analysing the role of the MIP in Germany 287 10.6 Conclusion 293 Chapter 11: What we learn from the analysis 295 11.1 Is the MIP hierarchical? 295 11.2 Does the MIP have an effect on national policymaking? 299 11.2.1 Substantive effects 299 11.2.2 Procedural effects 307 11.3 Unpacking causality: mechanisms and determinants 310 11.3.1 The MIP as an instrument of external pressure 310 11.3.2 The MIP as an instrument of cognitive shift 313 11.3.3 What are the key determinants of the MIP’s capacity to affect domestic policymaking? 317 11.4 What else do the case studies show? 319 11.5 Schematic summary of effects (simplifed) 322 Chapter 12: Conclusions and reflections 323 12.1 General conclusions 323 12.2 Reflections: The MIP and euro area legitimacy 328 12.3 Reflections: Is the MIP effective? 331 12.4 Reflections: The MIP and reforming the EMU 337 12.4.1 Option 1: maintain the status quo 337 12.4.2 Option 2: reorganise and reorient 338 12.4.3 Option 3: conditionality-based procedures 339 Literature 345 Annex 1: The Semester cycle 380 Annex 2: Alert Mechanism Report 2015 381 Annex 3: Coding methodology 382 List of abbreviations 384 List of interviews 387 Summary 389 Samenvatting 397 Acknowledgments About four years ago I received an email asking me whether I might be interested in doing a PhD. At the time, I Was hesitant as I thought it Would be monotonous and lonely to Work on a single project for such a long time.