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At Cross‐Purposes: Commercial Versus Technocratic Governance of Sovereign Debt in the EU

Barta, Zsófia and Schelke, Waltraud (2015) At Cross‐Purposes: Commercial Versus Technocratic Governance of Sovereign Debt in the EU. [Conference Proceedings] (Submitted)

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    A perennial problem for fiscal governance in the euro area has been the lack of support from markets. Far from disciplining budgetary policies, capital flows financed deficits at historically low interest rates even when they broke EU fiscal rules. Theory would lead us to expect that the international-­‐commercial and the supranational-­‐technocratic assessments of sovereign debt are fairly aligned. But they were not. We show that credit rating agencies (CRAs) and Eurostat have rather different assessments of what certain policies mean for sovereign debt: the privatization of state-­‐owned enterprises, pension reforms and more recently bank rescue programs. These assessments reveal divergent approaches. Private agencies are prone to conformism and herding behavior, allowing for little consistent discipline, while the public agency follows a bureaucratic imperative of accountability and transparency, which gets in the way of evolving policy priorities. Our findings thus shed light on the difficulties of fiscal governance by regulation only.

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    Item Type: Conference Proceedings
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > general
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Conference: European Union Studies Association (EUSA) > Biennial Conference > 2015 (14th), March 4-7, 2015
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 23 May 2017 18:16
    Number of Pages: 16
    Last Modified: 31 May 2017 13:11

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