Discussion Paper Details
Please find the details for DP6875 in an easy to copy and paste format below:
Title: Defying the 'Juncker Curse?: Can Reformist Governments Be Re-elected?
Author(s): Pietro Biroli, Marco Buti, Alessandro Antonio Turrini and Paul Van Den Noord
Publication Date: June 2008
Keyword(s): Economic and Monetary Union, electoral cycle, financial markets and structural reforms
Programme Area(s): International Macroeconomics
Abstract: European policy makers, notably in the euro area, seem to take for granted that the electorate will punish them for bold reform in product and labour markets. This may explain why progress in the euro area has been comparatively limited. This paper posits and, using a dataset for 21 OECD countries, shows that this fear of electoral backlashes is unfounded, provided that financial markets work well. The mechanisms involved are relatively straightforward: well functioning financial markets "bring forward" future yields of structural reform to the present, thus permitting to overcome possible short-run costs. As a result, the electorate tend to reward, not punish, reformist governments. This has important implications for the design of structural reform packages, with financial market reforms being an essential ingredient beside product and labour market reforms.
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Biroli, P, Buti, M, Turrini, A and Van Den Noord, P. 2008. 'Defying the 'Juncker Curse?: Can Reformist Governments Be Re-elected?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6875