The Distributional Impact of Austerity and the Recession in Southern Europe

Southern European welfare states are under stress. On the one hand, the recession has been causing unemployment to rise and incomes to fall. On the other hand, austerity has affected the capacity of welfare states to protect those affected. This paper assesses the distributional implications of the crisis in Greece, Spain, Italy and Portugal from 2009 to 2013. Using a microsimulation model, we disentangle the first-order effects of tax–benefit policies from the broader effects of the crisis, and estimate how its burden has been shared across income groups. We conclude by discussing the methodological pitfalls and policy implications of our research.     

The determinants of current account imbalances in the euro area: a panel estimation approach

The aim of this paper is to study the main macroeconomic, financial and structural characteristics that affected current account developments in the member-states of the euro area over the period 1980–2008. The model is based on the intertemporal consumption smoothing approach according to which current account positions are determined by saving and investment decisions. The analysis uses a panel of countries that consists of the initial 12 member states of the euro area and then it expands to 17 countries aiming to see whether the enlargement or potential enlargement would in any way alter the current account determinants. All the determinants of saving and investment decisions, which include factors such as the level of development, demographics, macroeconomic policies and competitiveness, appear to be important in underpinning sustained current account positions in the euro area countries.     

Current account determinants and external sustainability in periods of structural change

The aim of this paper is to study the main macroeconomic, financial and structural factors that shaped current account developments in Greece over the period from 1960 to 2007 and discuss these developments in relation to the issue of external sustainability. Concerns over Greece’s external sustainability have emerged since 1999 when the current account deficit widened substantially and exhibited high persistence. The empirical model used, which theoretically rests on the intertemporal approach, treats the current account as the gap between domestic saving and investment. We examine the behaviour of the current account in the long run and the short run using co-integration analysis and a variety of econometric tests to account for the effect of significant structural changes in the period under review. We find that a stable equilibrium current account model can be derived if the ratio of private sector financing to GDP, as a proxy for financial liberalisation, is included in the specification. Policy options to restore the country’s external sustainability are explored based on the estimated equilibrium model.     

Assessing models of citizenship in the EU: the idea of responsive citizenship

There is an interesting debate about democracy and citizenship in the EU. Views diverge about the features of democratic deficits currently facing the EU and accordingly, about the scope for Union citizenship. The paper suggests an analytical distinction between asymmetric and symmetric normative models of dual – national and Union – citizenship. Moreover, it proposes an alternative model of dual citizenship that puts emphasis on the responsiveness of citizens vis-à-vis phenomena that undermine democratic governance and the claim for equal respect and concern. One of the main ideas of responsive citizenship is that effective democratic control should complement procedural legitimacy in the EU as a means to prevent phenomena of political domination and guardianship. This is possible through the combination of competences ascribed on citizens through national and Community legislation vis-à-vis national and Union executive bodies.