Mañana: The societal origins of delayed fiscal adjustment

Barta, Zsófia (2015) Mañana: The societal origins of delayed fiscal adjustment. [Conference Proceedings] (Submitted)

PDF - Submitted Version Download (322Kb)

Abstract

Heavily indebted and in the throes of drastic austerity programmes, Italy and Ireland find themselves much in the same situation as a quarter of a century ago. In the second half of the 1980s and the early 1990s, the two countries carried out successful fiscal and economic stabilization programmes that elicited intense attention from scholars of economic adjustment. The recurrence of the two countries’ troubles provides an exceptional opportunity to put theories of economic adjustment to test. Comparative analyses of the earlier instances of stabilization concentrated on the similarities between the two cases and converged on emphasizing the importance of social pacts in allowing successful reform. In contrast, this paper shows that already a quarter century ago, the two countries followed very different trajectories to stabilization despite the institutional similarities of the solutions they adopted. It argues that fundamental differences in the two countries’ societal structure – more specifically, differences in the level of socio-­economic polarization – are crucial in understanding the differences in the two countries’ ability to renegotiate redistributive arrangements and thus to carry out successful adjustment then as now.

Actions (login required)