Credibility, rules and power in the European Union institutions

Vol. 26 No. 3 (2006)

Jul-Sep / 2006
Published July 1, 2006
PDF-English
PDF-English

How to Cite

Caballero, Abel, Gonzalo Caballero, and Abel Losada. 2006. “Credibility, Rules and Power in the European Union Institutions: a Transactional Analysis of the "Stability and Growth pact"”. Brazilian Journal of Political Economy 26 (3):445-58. https://centrodeeconomiapolitica.org/repojs/index.php/journal/article/view/609.

Credibility, rules and power in the European Union institutions

a transactional analysis of the "stability and growth pact"

Abel Caballero
professor of economics at the University of Vigo, faculty of economics, Vigo, Spain
Gonzalo Caballero
visiting professor at the University of Vigo
Abel Losada
professor of economic history and institutions at the University of Vigo
Brazilian Journal of Political Economy, Vol. 26 No. 3 (2006), Jul-Sep / 2006, Pages 445-458

Abstract

The credibility of the rules and the elements of power constitute fundamental keys in the analysis of the political institutions. This paper opens the “black box” of the European Union institutions and analyses the problem of credibility in the commitment of the Stability and Growth Pact (SGP). This Pact (SGP) constituted a formal rule that tried to enforce budgetary discipline on the European States. Compliance with this contract could be ensured by the existence of “third party enforcement” or by the coincidence of the ex-ante and ex-post interests of the States (reputational capital). The fact is that states such as France or Germany failed to comply with the ruling and managed to avoid the application of sanctions. This article studies the transactions and the hierarchy of power that exists in the European institutions, and analyses the institutional framework included in the new European Constitution.

JEL Classification: B520; H300; H600.


Keywords: institutions European Union Stability and Growth Pact commitment economic policy