Dynamic Stability and Reform of Political Institutions

This paper studies dynamic, endogenous institutional change. We introduce the class of dynamic political games (DPGs), dynamic games in which future political aggregation rules are decided under current ones, and the resulting institutional choices do not affect payoffs or technology directly. A companion paper (Lagunoff (2005b)) establishes existence of Markov Perfect equilibria of dynamic political games. The present paper examines issues of stability and reform when such equilibria exist. Which environments tend toward institutional stability? Which tend toward reform? We show that when political rules are dynamically consistent and private sector decisions areinessential,reform never occurs: all political rules are stable. Roughly,private sector decisions are inessential if any feasible ``social' continuation payoff can achieved by public sector decisions alone. More generally, we identify sufficient conditions for stability and reform in terms of recursive self selection and recursive self denial,incentive compatibility concepts that treat the rules themselves as ``players' who can strategically delegate future policy-making authority to different institutional types. These ideas are illustrated in an example of dynamic public goods provision.Recursive, dynamic political games, institutional reform, stability, dynamically consistent rules, inessential, recursive self selection.

The Dynamic Reform of Political Institutions

This paper formulates a model of dynamic, endogenous reform of political institutions. Specifically, a class of dynamic political games (DPGs) is introduced in which institutional choice is both recursive and instrumental. It is recursive because future political institutions are decided under current ones. The process is instrumental because institutional choices do not affect payoffs or technology directly. DPGs provide a broad framework to address the question: which environments exhibit institutional reform? Which tend toward institutional stability? In any state, private (public) sector decisions are essential if, roughly, they cannot always be replaced by decisions in the public (private) sector. We prove that institutional reform occurs if public sector decisions are not essential. Conversely, private sector decisions are essential if institutional reform occurs. The results suggest that a relatively more effective public sector is conducive to institutional stability, while a more effective private sector is conducive to change. We also show that if the political rules satisfy a dynamic consistency property, then the game admits ``political fixed points" of a recursive map from future (state-contingent) decisions rules to current ones. Since existence of political fixed points is a necessary condition of equilibrium, we apply the result to prove two equilibrium existence theorems, one of which implies that private and public sector decision rules that are smooth functions of the economic state.institutional reform, recursive, instrumental, dynamic political games, political fixed points.

The Dynamic Reform of Political Institutions

This paper introduces a class of games designed to study dynamic, endogenous reform of political institutions. Dynamic political games (DPGs) are dynamic games in which institutional choice is both recursive and instrumental. Future political aggregation rules are decided under current ones, and institutional choices do not affect payoffs or technology directly. We examine properties of the Markovian equilibria of DPGs. In any equilibrium, institutional reform occurs if the subsequent political rule is chosen to be different than the present one. Which environments exhibit institutional reform and which tend toward institutional stability? Private (public) sector decisions are said to be inessential if, roughly, they can always be replaced by decisions in the public (private) sector in a social planner's payoff. We show that if the private sector is inessential, then institutional reform never occurs. However, if public sector decisions are inessential, then institutional reform must occur. The result suggests that an ineffective private sector is conducive to institutional stability, while an ineffective public sector is conducive to change. We also address the ``political fixed point problem" that arises in a model of recursive institutional choice. Namely, the current political rule (e.g., majority voting) admits a solution only if all feasible political rules admit solutions in all future dates. If the class of political rules is dynamically consistent then DPGs are shown to admit political fixed points. This result is used to prove two equilibrium existence theorems, one of which implies that all decision rules are smooth functions of the economic stateRecursive, dynamic political games, institutional reform, political fixed points, inessential.

Neofunctionalism revisited : integration theory and varieties of outcomes in the Eurocrisis

The Euro crisis has produced a plethora of new institutions, policies, and projects to reform the Euro Area. This paper offers a theoretical and empirical contribution in the study of the New Economic Governance. By building on insights from classical Neofunctionalism and Liberal Intergovernmentalism, the paper revisits the static component of Philippe Schmitter's 'Neo-Neofunctionalist' framework. Static Neo-Neofunctionalism is then applied as a means to provide a systemic interpretation of crisis-led integration in the Euro crisis. The large majority of episodes of crisis-led integration in the 2011-2016 years is included in the analysis. In assessing Neo-Neofunctionalist expectations on the New Economic Governance, the paper matches analysis of legal documents with the results of a dedicated Expert Survey on the EMU governance fielded in October 2018

Historical-institutionalist perspectives on the development of the EU budget system

The EU budget has only recently started to feature in theories of European integration. Studies typically adopt a historical-institutionalist framework, exploring notions such as path dependency. They have, however, generally been rather aggregated, or coarse-grained, in their approach. The EU budget has thus been treated as a single entity rather than a series of inter-linked institutions. This paper seeks to address these lacunae by adopting a fine-grained approach. This enables us to emphasize the connections that exist between EU budgetary institutions, in both time and space. We show that the initial set of budgetary institutions was unable, over time, to achieve consistently their treaty-based objectives. In response, rather than reform these institutions at potentially high political cost, additional institutions were layered on top of the extant structures. We thus demonstrate how some EU budgetary institutions have remained unchanged, whilst others have been added or changed over time

From Barcelona Process to Neighbourhood Policy: Assessments and Open Issues. CEPS Working Documents No. 220, 1 March 2005

The Barcelona process so far has been a valuable systemic/institutional advance in Euro-Med relations and a confidence-building measure on a large scale. But it has not been a sufficient driving force to have created a momentum of economic, political and social advance in the partner states. It is therefore quite plausible that the EU should seek some new advance – through the European Neighbourhood Policy (ENP) – to build on the positive features of Barcelona and so try to introduce some new driving force. The Action Plans currently being adopted seek to make the often vague intentions of the Association Agreements of the Barcelona process more operational by linking them to either domestic policy programmes of the partner state or to EU policy norms and standards as an external anchor. In this paper we first crystallise alternative approaches for the ENP to become a real driving force under the headings of ‘conditionality’ and ‘socialisation’. The conditionality concept would mean that the EU sets out i) what incentives it offers, and ii) the conditions on which these incentives would be delivered. The socialisation concept relies essentially on a learning process that comes from the extensive interaction between actors in the partner states and the EU, which induces the partner states to engage in policy reforms that are to a degree modelled on EU norms or derive some inspiration from them. For the EU to become a driving force for reform in the region also requires that it does not have to face an uphill struggle against negative tendencies, for example in the widening and deepening of radical Islam – and here the issue of coherence in the approaches of the EU and US together is paramount