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41. Individual Accountability in International Economic Policymaking after the Global Financial Crisis

Author:
Stefano Pagliari and Iosif Kovras
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
In the aftermath of the global financial crisis, the design of accountability mechanisms has taken on renewed importance in academic and policy debates. Calls for holding individuals whose actions and omissions contributed to the meltdown accountable have gained traction in a number of countries after the crisis. Yet, individual accountability norms are seemingly absent from the international economic agenda in response to crisis. In this paper we address this puzzle by exploring the evolution of two major international organisations, the IMF and the FSB, in bringing accountability following financial crises. Our analysis reveals how these institutions have increasingly incorporated in their toolkit policy recommendations related to the unethical or illegal conduct by government officials of individuals in the financial industry, but these tools were geared almost exclusively towards forward-looking policies designed to deter the reoccurrence of illegal or unethical behavior rather than punishing or scrutinizing past wrongdoing. We argue that the extent to which individual accountability norms permeate the international economic agenda is mediated by the institutional characteristics of the organizations that comprise the international financial regime.
Topic:
Financial Crisis, Governance, Culture, Accountability, and Bureaucracy
Political Geography:
Global Focus

42. Fiscal resiliency in a deeply uncertain world: The role of semiautonomous discretion

Author:
Peter R. Orszag, Robert E. Rubin, and Joseph E. Stiglitz
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Orszag, Rubin, and Stiglitz outline a new fiscal framework that they argue would better equip policymakers to face deep uncertainties about future interest rates (which, they say, may not remain low forever), hard-to-predict global shocks, and climate risks. They reject fiscal anchors—simple limits on deficits or debt as a share of GDP that governments adopt to check their spending and borrowing—that have historically guided fiscal policy and believe any attempts to modify such targets for the current period of low interest rates are likely to fail. Instead they propose making the budget respond more automatically to economic distress (through stronger automatic stabilizers) and to long-term fiscal pressures (e.g., embedding adjustment mechanisms in health care and pension programs), as well as creating an infrastructure program and extending debt maturities to insure against interest rate changes. Such a "streamlined dashboard" would then allow policymakers to use discretion as necessary to take any additional actions—either to provide more stimulus during short-term difficulties or to adjust the automatic features themselves—rather than adhering to fiscal targets that may no longer be appropriate when economic conditions change.
Topic:
Financial Crisis, Economy, Fiscal Policy, and Fiscal Deficit
Political Geography:
Global Focus

43. Startups in the United States during the pandemic reflect some dynamism amid job losses

Author:
Simeon Djankov and Eva (Yiwen) Zhang
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
New business applications have surged in the United States since the start of the COVID-19 pandemic. The growth is driven largely by startups in online retail, transportation, and personal services. Many of these new entrepreneurs are self-employed and were likely laid off and forced into entrepreneurship by necessity. No official data are available yet on the number of businesses destroyed in 2020, because business data for firms that close without entering bankruptcy are lagging. But the authors calculate that firm births may have surpassed firm deaths during the pandemic. While this boom in business entry is a tribute to the adaptability and potential innovative spirit in US capitalism, one should not be overly optimistic about jobs created in this wave of startups. As many of these new startups are by people forced to strike out on their own, the number of jobs created per new firm is even smaller than it was during previous US recessions. And like online businesses started around the last recession (e.g., Uber, Airbnb, and Venmo), some of these new firms may turn out to be major contenders in their sectors, displacing workers employed by their traditional rivals.
Topic:
Science and Technology, Labor Issues, Financial Crisis, and COVID-19
Political Geography:
North America and United States of America

44. Bank recapitalizations in Greece: From state-led bailouts to the ownership transfer of banks to foreign hands

Author:
Athanasios Kolliopoulos
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
A decade after the conclusion of the first economic adjustment programme in 2010 and despite three consecutive recapitalizations, Greek banks still suffer from the highest Non-Performing Loans ratio in the Eurozone, with credit expansion in the “real economy” remaining anemic. Furthermore, the overall impact on public debt from government financial support to Greek banks over the last decade was one of the largest among the Eurozone countries. What went wrong? What were the reasons that the domestic financial system ended up in this exceptionally sad state? Why did the recapitalization policy not have the desired outcome? Exploring these questions throughout the literature of responses to banking crises, this paper shows that recapitalization policy in Greece failed to exploit the advantages of the principal forms of bank rescues. In fact, the significant inertia prevailing among authorities and bankers throughout the recapitalizations brought about the ownership transfer of the Greek banking system to foreign hands (“dehellenization”) after the third recapitalization in late 2015. You may acces the full paper by Dr. Athanasios Kolliopoulos, Postdoctoral Researcher at the Athens University of Economics and Business, here.
Topic:
Financial Crisis, Banks, Recapitalizations, Bailout, and Banking Crisis
Political Geography:
Europe and Greece

45. It’s Time for a New Deal

Author:
Constantine Michalopoulos
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The prospects of the Greek economy are mostly good with growth continuing for the fourth straight year. But there is a sense of disappointment, as the recovery has not been very strong and pre-crisis income levels will not be regained for another decade. There are two main reasons for the sluggish recovery: The European creditors have imposed on Greece the requirement to run a primary budget surplus of 3.5% of GDP for five years to ensure that they get repaid—a requirement that constricts growth of the Greek private sector—through heavy taxation of consumers and business. And domestic investment is sluggish, although there are plenty of unutilized resources, such as those provided by the European Structural Funds. There is a need for a new deal with the European Institutions: the Europeans should be more relaxed about getting repaid because of Greece’s much improved access to the European capital markets and be willing to accept a Greek government commitment to a significantly lower primary budget surplus for the next several years. In exchange the Greek government should commit to a commensurate increase in domestic investment through reforms of the banking sector as well as greater public sector investment spending.
Topic:
Government, Financial Crisis, Economy, Economic Growth, and Public Spending
Political Geography:
Europe and Greece

46. The economic impact of COVID-19 on the EU: From the frying pan into the fire

Author:
Fabian Zuleeg
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
The world is facing an unprecedented economic crisis due to the ongoing COVID-19 pandemic. At a time when the first instinct is to focus on the national level and greater sovereignty and self-reliance, the best strategy to answer the crisis lies in greater cooperation. Fabian Zuleeg analyses the onset of this crisis and provides sound predictions of future economic impacts by applying lessons from previous recessions.
Topic:
Financial Crisis, Economy, and COVID-19
Political Geography:
Europe

47. The Eye of the Storm

Author:
George G. Namur
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Lebanon is in the throes of an unprecedented crisis in its modern history. Starting 17 October 2019, the people of Lebanon have been protesting in the streets in a broad-based uprising. This paper highlights key post–civil war realities and practices that led to the country teetering and proposes a solution package to what ails the country and threatens its future.
Topic:
Corruption, Financial Crisis, Governance, Social Movement, Revolution, and Political Crisis
Political Geography:
Middle East and Lebanon

48. Why a Traditional Austerity Plan Would Exacerbate Lebanon’s Woes

Author:
Mounir Mahmalat
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Following the eruption of mass protests in autumn 2019, Lebanon’s economy slid into a deep financial and economic crisis. Given the magnitude of Lebanon’s contemporary economic woes, a bailout program with participation by the International Monetary Fund (IMF) appears unavoidable. However, while a bailout program could avoid formal default and cushion the immediate effects of financial impasse, the austerity measures that will come attached are unlikely to achieve their goals. This article argues that in clientelist polities with weak states such as Lebanon’s, austerity programs carry the risk of leaving unaddressed the underlying inefficiencies that led to economic decline in the first place. Instead of prioritizing budgetary measures and spending cuts in a conditional reform program, international donors should seize this novel window of opportunity to legitimize a reform plan with popular demands. Measures to increase judiciary independence and political accountability in particular bear a larger potential than austerity measures alone to change politics and finally create a sustainable economic model.
Topic:
Financial Crisis, Austerity, Sustainability, and Economic Stability
Political Geography:
Middle East and Lebanon

49. Financial Transactions Taxes: Inaccessible and Expensive

Author:
Diego Zuluaga
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Financial transactions taxes (FTTs) have become increasingly popular since the 2008 financial crisis. During the 2020 Democratic presidential primary race, FTTs featured prominently on the platforms of both moderate Michael Bloomberg and socialist Bernie Sanders. The likely nominee, Joe Biden, has also expressed support for an FTT, albeit without offering any details in his election platform.
Topic:
Financial Crisis, Finance, Domestic Politics, Tax Systems, and Transactions
Political Geography:
North America and United States of America

50. The Economic Consequences of Globalisation in the United States

Author:
Peter Petri and Meenal Banga
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The unprecedented rise in global interdependence since World War II, especially since the 1970s, has been very productive. World gross domestic product (GDP) growth increased from around 2% per year in the 1970s to 4% per year before the global financial crisis. Globalisation helped to lift a billion people from extreme poverty and improved the lives of billions more. The United States also gained an estimated 11%–19% of its annual GDP. Yet many Americans are concerned about the fairness of these gains. We review evidence of increasing wage inequality and stubborn unemployment effects, even though, on balance, technological change has had a much greater impact on these outcomes than globalisation. Barriers against globalisation do not offer solutions to inequality – they reduce the size of the economic pie without necessarily improving its distribution. Policies should focus on redistributing gains from growth, increasing the productivity of all workers, and helping affected communities adapt socially and economically to rapid change.
Topic:
Globalization, Financial Crisis, Inequality, and Economic Growth
Political Geography:
United States and North America