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Financial adjustment as a driver of growth model change: a balance-sheet approach to comparative political economy

Spielberger, Lukas and Voss, Dustin ORCID: 0000-0001-5329-2682 (2022) Financial adjustment as a driver of growth model change: a balance-sheet approach to comparative political economy. Comparative European Politics. ISSN 1472-4790

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Identification Number: 10.1057/s41295-022-00290-9


Growth model theory has turned the focus of comparative political economy scholars on the demand drivers of economic growth. But while its proponents emphasize the variety and inherent instability of growth models, research so far has been more concerned with the emergence and coherence of stable growth models than in the process of change. We argue that growth model change can be understood as a process of financial rebalancing on the level of institutional sectors. When an overindebted sector is forced to deleverage, a politically contested process emerges over the path of adjustment. We derive various ways in which each sector can contribute to this process of financial adjustment, which we conceptualize as the activation of macroeconomic ‘compensation valves’. This process shapes the trajectory of economic performance during financial crisis and determines whether a new feasible growth model can emerge in its aftermath. We apply our analytical lens in a comparative case study of Germany and the Netherlands during the Great Recession. We conclude that future research on growth models should more explicitly problematize the ability of political economies to adapt to financial instability.

Item Type: Article
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Additional Information: © 2022 Springer Nature Limited.
Divisions: European Institute
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
G - Financial Economics > G0 - General > G00 - General
Date Deposited: 18 Aug 2022 16:36
Last Modified: 12 Sep 2022 11:45

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