Large fiscal challenges will confront OECD governments for some time to come. The economic crisis that began in 2008 caused deficits to surge, and fiscal imbalances were swollen further by stimulus measures and bank rescue operations. Together, these forces led to ballooning public indebtedness, the general government public debt-GDP ratio rising from under 80% of GDP in 2008 to almost 100% of GDP in 2010. In many countries, arresting the …Read More

Europe’s mainstream political parties are fighting a grand ideological battle between growth and austerity which they believe will define the post-crisis political era. However, electorates largely reject these new dividing lines which parties on the Left and Right seek to draw. They appear to mistrust the level of influence that policymakers claim to have over economic outcomes in the globally integrated austerity state. This paper considers the extent to which …Read More

Despite the latest ‘Cyprus saga’, there has been no fundamental change concerning the euro crisis: the ECB’s decisiveness, the substantially reduced risk of a euro exit, and cautious attempts towards addressing the incomplete EMU construction has substantially reduced the danger of a systemic meltdown. However, the epicentre of the crisis has shifted to other equally worrying dimensions: the social and political. Policy-makers at EU and national level will have to …Read More

Following the unexpected results of the latest political elections in Italy, the country finds itself in a political stalemate. The Five Star Movement by Beppe Grillo won an astonishing 25.5% of the votes while the Democratic Party failed to win a clear majority in the Senate. The disillusion and anger of Italians with their political class predates the current economic crisis and goes a long way in explaining their apparent …Read More

To err is human, but persevere with what is wrong is not. However, that is what European leaders and EU economic and financial authorities would like us to do. Since 2010, the number of austerity packages increased in Europe in order to deal with the sovereign debt crisis and to reassure the financial markets. The measures adopted by governments in Europe, as well as European institutions’ recommendations are mainly of …Read More

Avoiding moral hazard and making sure that tax payers of creditor countries get their money back have brought the concept of conditionality-setting conditions in exchange of financial aid- to the fore. Can it ever be legitimated on the ground, when citizens of bailout countries have to accept austerity programmes in which their governments, let alone parliaments, have had limited input and when they appear to defeat their own purpose by …Read More