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EU Fiscal Policy Coordination in Hard TimesFree Riders on the Storm$
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Charlotte Rommerskirchen

Print publication date: 2019

Print ISBN-13: 9780198829010

Published to Oxford Scholarship Online: March 2019

DOI: 10.1093/oso/9780198829010.001.0001

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(p.69) 5 Beggar-Thy-Neighbors
EU Fiscal Policy Coordination in Hard Times

Charlotte Rommerskirchen

Oxford University Press

Diverse groups are a hotbed for free riders. This chapter thus tests whether fiscal policy coordination was marred by collective action failure. The central claim of this chapter is that accusations of stability or growth free riding are not borne out by factual evidence. Using regression analysis and Qualitative Comparative Analysis, the chapter shows that despite their greater ability to free ride (given their political clout and trade links), larger and more open economies implemented larger stimulus programs. Fiscal policy is further analyzed vis-à-vis a country’s fiscal space. Results show that, by and large, member states stimulated their economies in line with their fiscal room for maneuver. These findings are contrasted with the political discourse of the time, when indictments of growth free riding were widespread. Accusations of beggar-thy-neighbor politics were rife; first-order free riding was not.

Keywords:   fiscal policy coordination, fiscal space, Macroeconomic Imbalances Procedure, free riding, Germany, France, economic stimulus, European Union, Great Recession

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