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Nein to 'Transfer Union': the German brake on the construction of a European Union fiscal capacity
[journal article]
Abstract This paper argues that, on the development of European Union (EU)/Eurozone fiscal capacity German governments have consistently engaged in foot-dragging. Few German state elites have ever supported European fiscal capacity building beyond the EC budget. Following the outbreak of the Eurozone soverei... view more
This paper argues that, on the development of European Union (EU)/Eurozone fiscal capacity German governments have consistently engaged in foot-dragging. Few German state elites have ever supported European fiscal capacity building beyond the EC budget. Following the outbreak of the Eurozone sovereign debt crisis, German governments agreed to the creation of financial support mechanisms only with reluctance. We see a case of continuity in German policy preferences driven by consistent ordoliberal and, specifically, moral hazard concerns. The important long-term change that we can observe relates to the growing importance for successive governments of avoiding audience costs driven by sceptical public opinion and the rise of a challenger party in German politics. German government support for a massive EU fiscal response to the economic crisis triggered by the COVID-19 pandemic demonstrates an exceptional policy position in favour of temporary financial mechanisms involving no fiscal transfers among member state governments.... view less
Keywords
Federal Republic of Germany; fiscal policy; stabilization policy; European Policy; EU; Eurozone
Classification
Economic Policy
European Politics
Free Keywords
COVID-19; Coronavirus; core state powers; fiscal capacity; Eurobonds; European Stability Mechanism; next Generation EU; Politbarometer 2011
Document language
English
Publication Year
2021
Page/Pages
p. 209-226
Journal
Journal of European Integration, 43 (2021) 2
Issue topic
A member state like any other? Germany and the European integration of core state powers
DOI
https://doi.org/10.1080/07036337.2021.1877690
ISSN
1477-2280
Status
Published Version; peer reviewed