| dc.description.abstract | Abstract
The research paper aims to explain why the 2007-2012 financial crises (FC) and 2020 MFF budget discussions had different outcomes. The empirical study reveal that FC had huge implications on the eurozone prompting EU member states (MS) to coordinate response. The lack of reform initiated a sovereign debt crisis in 2010 and macroeconomic policy change from fiscal expansion to austerity. In contrast, the 2020 MFF budget discussion resulted in a giant fiscal stimulus package. The study argues that key variables (i) Nature of the Crises, (ii) Demand for fiscal reform and (iii) Superior crisis-assessment explain why the 2007-2012 FC and 2020 MFF budget discussion led to different outcomes. The COVID-19 crisis affected MS evenly, while the 2007-2012 FC revealed that MS saved their own banks. Only when the EMUs survival was at stake the MS acted. The EU of 2020 was more resilient with the addition of ESM and revision of the SGP and activation of its escape clause. It is revealed that EU lacked in 2007-2009 superior crisis-assessment by not letting ECB lend of last resort, and assuming symbolic leadership where comprehensive action was a necessity. The variables resulted in a positive snowball effect and positive rate-growth differential (RGD) for Greece. | |
