This seminar is part of the "Europe and the Global Economy" series.

With the creation of the euro, the European Union embarked on a grand experiment. From the beginning, member countries had widely different degrees of budget, or fiscal, transparency. Early warnings about the potential of moral hazard in public finances as a consequence of asymmetric information about fiscal decisions were largely disregarded. In this paper, we analyze the political origins of differences in adherence to the fiscal framework of the euro. We identify in detail how manipulation of subcomponents of Stock-Flow Adjustments in national accounts is used to produce electoral cycles under the radar of the budget surveillance system of the EU. We show how these domestic incentives to use fiscal policy for electoral purposes and respond to fiscal rules at the supranational level interacted with limited budget transparency at the level of national fiscal authorities to produce a systematic undermining of the Economic and Monetary Union through employment of fiscal gimmicks or creative accounting.

David Dreyer Lassen (PhD 2002, Copenhagen) is Professor of Economics at the University of Copenhagen. His research is in empirical political economy and public economics, and includes work on fiscal transparency, political budget cycles, the politics of budgeting, and quasi-experiments in political behavior and political attitudes. His publications includes articles in American Economic Journal-Economic Policy, American Journal of Political Science, American Political Science Review, Journal of Public Economics and the Journal of Law, Economics and Organization. He has been a visiting scholar at IQSS, Harvard University, and currently holds a Starting Grant from the European Research Council.

*PLEASE NOTE:  The room for this seminar has been changed to the Reuben Hills Conference Room, Encina Hall East, 2nd floor.

Bjørn Høyland will present his joint work with Sara B. Hobolt and Simon Hix titled "Career Ambitions and Legislative Participation: The Moderating Effect of Electoral Institutions".  In multi-level political systems politicians are faced with several possible career paths, as they can advance their careers at either the lower (state) or higher (federal) level.  Career ambitions lead representatives to carefully adapt their behavior to maximize their chances of being re-elected and promoted to higher office at their preferred level of government.  Høyland, Hobolt and Hix argue that the design of the electoral institutions influences how politicians respond to these incentives.  Analyzing a unique dataset of both ‘stated’ and ‘realized’ career ambitions of Members of the European Parliament (MEPs) they find that politicians seeking high political office in their home state reduce their legislative participation in the European Parliament, whereas politicians who seek to further their careers at the European level increase their legislative engagement.  In addition, they find that this latter effect is strongest for politicians elected in party-centered electoral systems.  This finding has implications for the literature on electoral institutions and legislative behavior.

This seminar is part of TEC's "European Governance" program seminar series.

Bjørn Høyland (PhD, London School of Economics, 2005) is Professor of Political Science at the University of Oslo, Norway. He is currently visiting Professor and Anna Lindh Fellow at the Europe Center, Freeman Spogli Institute for International Studies, Stanford. The focus of his research is European Union politics and comparative legislative politics. Professor Høyland’s list of journal publications includes the American Political Science Review, Annual Review of Political Science, British Journal of Political Science, and European Union Politics. His textbook (with Simon Hix) The Political System of the European Union (3^rd ed) is the standard text for advanced courses on the European Union. 

This seminar is part of the "Europe and the Global Economy" series.

How do geopolitical forces influence international capital markets? In particular, do market actors condition their responses to crisis lending initiatives on the political incentives of major lenders? In this paper, Randall Stone and co-writers Terrence Chapman, Songying Fang and Xin Li  analyze a formal model which demonstrates that the effect of crisis lending announcements on international investment flows is conditional on how market actors interpret the political and economic motivations behind lending decisions on the part of the lender and borrower. If investors believe the decision to accept crisis lending is a sign of economic weakness and lending decisions are influenced by the political interests of the major donor countries, then crisis lending may not reduce borrowing costs or quell fears of international investors. On the other hand, if market actors believe that crisis lending programs, and attendant austerity conditions, will significantly reduce the risk of a financial crisis, they may respond with increased private investment, creating a "catalytic effect."  In this model, the political biases of key lending countries can affect the inferences market actors draw, because some sovereign lenders have strategic interests in ensuring that certain borrowing countries do not collapse under the strain of economic crisis. Although this theory applies to multiple types of crisis lending, it helps explain discrepant empirical findings about market reactions to IMF programs. The implications of their theory is tested by examining how sovereign bond yields are affected by IMF program announcements, loan size, the scope of conditions attached to loans, and measures of the geopolitical interests of the United States, a key IMF principal.

Randall Stone (Ph.D. 1993, Harvard) is Professor of Political Science at the University of Rochester.  His research is in international political economy and combines formal theory, quantitative methods, and qualitative fieldwork.  He is the author of Controlling Institutions:  International Organizations and the Global Economy (Cambridge University Press 2011), Lending Credibility:  The International Monetary Fund and the Post-Communist Transition (Princeton University Press, 2002) and Satellites and Commissars:  Strategy and Conflict in the Politics of Soviet-Bloc Trade  (Princeton University Press, 1996), as well as articles in the American Political Science Review, International Organization, International Studies Quarterly, the Journal of Conflict Resolution, Review of International Organizations, and Global Environmental Politics.  He has been awarded grants by the NSF, SSRC, NCEEER, and IREX, was the last recipient of the Soviet Peace Prize (1991), and has been a Senior Fulbright Scholar visiting the Stiftung Wissenschaft und Politik in Berlin.  He speaks German and Russian fluently and Polish moderately well, and reads all Slavic languages. 

This seminar is part of the "European Governance" program series.

The number of international courts/international tribunals has burgeoned in the past two decades, with the continued proliferation of international agreements and the growing importance of globalization for the world economy.  Do these courts matter?  We develop a theory of how an international court lacking any power to enforce its rulings can promote compliance among the member governments and enhance the performance of international agreements. We argue that the adjudication process can cause governments to comply with adverse rulings because it facilitates enforcement of the agreement by the other member states.  This argument implies two empirical predictions that we examine in the European Union using an original dataset of rulings of the European Court of Justice from 1960-1999. We show that ECJ rulings are sensitive to the enforcement concerns identified by our theory. Further, we show that ECJ rulings designed to liberalized trade (a key goal of the EU) are only effective when the adjudication process reveals that noncompliance will be punished by third-party governments.

Matthew Gabel is Professor of Political Science at Washington University in St. Louis. He has a Ph.D. from the University of Rochester and and M.A. from the College of Europe (Bruges).  He is the associate editor of the journal European Union Politics.  His research has examined a variety of topics of international political economy and comparative political economy in Europe, particularly in the context of European integration.  This includes public support for European integration, judicial politics at European Court of Justice, and the legislative politics in the European Parliament. Separately, he also collaborates with Neurologists and Psychiatrists on the diagnosis of Alzheimer's Disease.