Michele Chang

Fiscal Policy Coordination and the Future of the Community Method

Abstract The global financial and sovereign debt crises led to the creation of numerous new agreements and institutions to contain the current crisis and prevent future ones. These measures reinforce the historical trend towards the predominance of intergovernmental decision-making in economic and monetary union (EMU), going so far as to re-intergovernmentalize cooperation that had previously been decided upon by the Community method. Using principal–agent analysis, this contribution looks at fiscal policy cooperation since the outbreak of the sovereign debt crisis and considers how the impact of re-intergovernmentalization is manifested largely in the policy process rather than the policy outcome. However, this is still cause for concern given the precarious nature of EMU’s legitimacy and the loss of efficiency that delegation typically provides.

Monetary integration in the European Union

Introduction The Origins of Economic and Monetary Union The Birth of the Euro and the Eurozone The Institutions and Decision Processes of Monetary Union The European Central Bank Cooperation Through Consultation: The Stability and Growth Pact and Beyond The EU Beyond the Eurozone: The UK, Denmark, Sweden and the Accession States The International Role of the Euro The Eurozone: An Initial Balance Sheet Conclusion: EMU and European Integration

All in: Market expectations of eurozone integrity in the sovereign debt crisis

ABSTRACT The behaviour of sovereign bond investors stands at the heart of the euro area debt crisis. By pushing upward the yields on the government debts of member states standing in the eurozones periphery, investors caused, in a self-fulfilling way, the crisis that ultimately threatened the eurozones integrity and the euros survival. So how do we explain the behaviour of market investors before, during and after the eurozones sovereign debt crisis? Why did investors not discriminate in their pricing of eurozone sovereign bonds before the crisis? Why did they abruptly change their minds in 2010? And why have they gradually felt reassured enough from mid-2011, depending on the country, to ask for significantly lower yields on sovereign bonds? To answer these questions, the paper argues that investors’ confidence rests to a large extent on the expectation of the eurozones solidarity, which is why large-scale multilateral solutions coming from the euro area were more successful in resolving the crisis than unilateral ones coming primarily from the debtor countries. As a result, this paper improves our understanding of the international political economy of financial (currency, bank and debt) crises by looking at the particular case of a monetary union with a single currency.

The Services Directive: Trojan Horse or White Knight?

Abstract The European Union’s internal market has been at the heart of the integration process since the Treaty of Rome. The 2004 Services draft Directive (known as the Bolkestein proposal) launched an avalanche of protest despite substantial purported economic gains. A proper appreciation of the Services Directive requires a tri‐disciplinary approach, which we intend to provide. It became a lightning rod for criticism and a rallying cry for those opposing further market integration, social dumping and the extension of the Anglo‐Saxon social model. The directive purportedly served as a Trojan horse for increased liberalism in the eyes of opponents, whereas supporters saw it more akin to a white knight that would rescue Europe from its inflexible labour market. Indeed, the Services Directive (both the 2004 Bolkestein draft and the adopted directive 2006/123) is misunderstood in that it is both bolder and more timid than its critics and proponents, respectively, would have one believe. We show that the development of the Services Directive can be understood far better when economic, legal and political science analysis is employed together, in particular, for the meaning, scope and timing of both versions. Services remain a key sector of economic growth for the EU and the directive is likely to have important implications economically, legally and politically, possibly with long‐term effects on EU integration.