Keep it complex! Prodi’s curse and the EU fiscal governance regime complex

ABSTRACT

The EU fiscal framework has gradually morphed into a regional regime complex through various reforms of the preventive and corrective arms of the Stability and Growth Pact. A regime complex encourages actors to arbitrage between partially overlapping, parallel and nested rules. By drawing on this central insight, this article demonstrates that regime complexity enables member states to respect the letter but not the spirit of the fiscal rules to lower the cost of compliance. It further shows empirically how regime complexity weakens technocratic enforcement capacity when authority is dispersed across multiple levels of governance by focusing on the example of the general escape clauses during the coronavirus pandemic.

KEYWORDS:

• EU fiscal governance
• stability and growth pact
• fiscal rules
• euro area
• regime complexity

Acknowledgements

I am grateful for the insightful comments and guidance provided by the two anonymous reviewers and the editors. I would like to thank Daniel Mügge and the fickle formulas team for their support during my postdoctoral research fellowship. An earlier version of this article has been published as a fickle formulas working paper No.04-2021.

Disclosure statement

No potential conflict of interest was reported by the author(s).

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Notes on contributors

Tobias Tesche

Tobias Tesche was a postdoctoral research fellow in Political Economy at the University of Amsterdam from 2019 to 2020. He holds a PhD in Political Sciences from the European University Institute in Florence. He has worked as a policy officer in the European Commission and as a bank resolution expert at the Single Resolution Board. His research focuses on EMU governance, central banking, the politics of banking union, and the political economy of fiscal councils and macroeconomic indicators. His peer reviewed articles have been published in the JCMS: Journal of Common Market Studies, the Journal of Economic Policy Reform, and the Journal of European Integration among others.