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This chapter analyses the special nature of banks, and how the importance of the banking sector and its stability overlaps with the preservation of competitive banking markets. Banks have a unique standing in the economy, and are regarded as more vulnerable to instability than other firms as they provide liquidity and are involved in inter-bank lending markets and the payment system. Due to the systemic nature of banks, governments try to avert a crisis that can affect the whole banking sector by ensuring that banks which are ‘too big to fail’ remain sustainable. Such intervention has a distortive effect on competition, as it prevents ‘self-correction’ of the market. State aid measures that characterized the response of regulators in the recent financial crisis were based on the premise of the special nature of the banking sector and its importance to the economy. In addressing the special nature of banks the chapter looks into the approach adopted towards banks under State aid control, tackling issues such as ‘too-big-to-fail’ and the BRRD and SRM.
Brett Fiebiger and Marc Lavoie
In late 2008 a consensus was reached amongst global policymakers that fiscal stimulus was required to counteract the effects of the Great Recession, a view dubbed as the New Fiscalism. Pragmatism triumphed over the stipulations of the New Consensus Macroeconomics, which viewed discretionary fiscal actions as an irrelevant tool of counter-cyclical macroeconomic policy (if not altogether detrimental). The partial re-embrace of Keynes was however relatively short-lived, lasting only until early 2010 when fiscal consolidation came to the forefront again, although the merits of fiscal austerity were questioned when economic recovery did not really materialize in 2012. This paper traces the ups and downs of the debate over the New Fiscalism, especially at the International Monetary Fund, by analysing IMF documents and G20 communiqués. Using fiscal policy as a means to exit the crisis remains contentious even amidst recognition of secular stagnation.
Marc Lavoie and Mario Seccareccia
The vertical division of responsibility for social services within and beyond the State: issues in empowerment, participation and territorial cohesion
Changes, Challenges and Policy Implications for Europe in Times of Austerity
Stefania Sabatinelli and Michela Semprebon
Public responsibility for social policies in Europe has been extensively ‘re-scaled’ in the last decades, both upwards, from the national state towards the EU, and downwards, towards the local level. In this complex process, ambivalent traits and impacts are emerging: on the one side re-scaling may be associated with more participatory, place-specific and effective processes and programmes; on the other it may entail blame avoidance, opacity and reduction in accountability. Moreover, re-scaling processes are not uniform: they take different forms in different national contexts and – within each context – in different policy fields. This chapter tackles the ambivalences of the varying patterns of change in the vertical division of responsibility and their implications for the delivery of social services. It explores the room for manoeuvre available to local bodies for pursuing quality, efficiency and innovation; the emerging forms of local governance; and the spaces for citizens’ participation and empowerment. All these aspects ultimately affect territorial and social cohesion and equal opportunities for accessing welfare resources in each country. The analysis is based on case studies produced within the COST Action IS1102 SO.S. COHESION – Social services, welfare states and places, referring to three policy fields: early childhood education and care, long-term care, and the social inclusion of migrants and Roma. The chapter is organized in three sections: in the first, the theoretical debate on re-scaling processes is briefly recalled to frame the trajectories observed in European welfare systems; in the second, the possible repercussions of changes in the vertical division of responsibility are discussed, taking into consideration the case studies; in the third, some conclusions are drawn, highlighting critical policy issues.
Promises and Limits of Democratic Participation in Latin America
The introduction defines political/democratic innovation as the capacity of government to express political will and civil society inputs in several formats. Usually, these inputs are linked to the introduction and/or implementation of public policies, through which civil society and the state interact in order to democratize the state itself. It based on this definition that different experiences of innovation will be analysed.