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Bringing macroeconomics back into the political economy of reform: the Lisbon Agenda and the 'fiscal philosophy' of EMU

Mabbett, Deborah and Schelkle, Waltraud (2007) Bringing macroeconomics back into the political economy of reform: the Lisbon Agenda and the 'fiscal philosophy' of EMU. Journal of Common Market Studies, 45 (1). pp. 81-103. ISSN 0021-9886

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Abstract

The Lisbon Strategy supports reform of Member States’ tax-benefit systems while the ‘fiscal philosophy’ of the EMU postulates that governments should allow only automatic stabilizers, built into tax-benefit systems, to smooth aggregate income. We ask whether these two pillars of EU economic governance are compatible. By exploring how structural reforms affect fiscal stabilization, we complement a political economy literature that asks whether fiscal consolidation fosters or hinders structural reforms. Using EUROMOD, a tax-benefit model for the EU-15, we identify the connections between specific tax and benefit reforms and the size of the stabilizers. We conclude that Lisbon-type reforms may worsen the stabilizing capacity of tax-benefit systems.

Item Type: Article
Official URL: http://www.blackwellpublishing.com/journal.asp?ref...
Additional Information: © 2007 The Authors
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
J Political Science > JN Political institutions (Europe)
Sets: Departments > European Institute
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 22 Jul 2008 12:50
URL: http://eprints.lse.ac.uk/14934/

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