Preferences and Power in the European Community : a Liberal In...

This paper presents statistical analysis supporting stylized facts about sovereign wealth funds (SWFs). It discusses the forces leading to the growth of SWFs, including the role of fuel exports and ongoing current account surpluses, and large hoarding of international reserves. It analyzes the degree to which measures of SWF governance and transparency compare with national norms of behavior. We provide evidence that many countries with SWFs are characterized by effective governance but weak democratic institutions, as compared to other nonindustrial countries. We also present a model with which we compare the optimal degree of diversification abroad by a central bank versus that of a sovereign wealth fund. We show that if the central bank manages its foreign assets with the objective of reducing the probability of sudden stops, it will place a high weight on the downside risk of holding risky assets abroad and will tend to hold primarily safe foreign assets. In contrast, if the sovereign wealth fund, acting on behalf of the Treasury, maximizes the expected utility of a representative domestic agent, it will opt for relatively greater holding of more risky foreign assets. We discuss how the degree of a country's transparency may affect the size of the foreign asset base entrusted to a wealth fund's management, and show that, for relatively low levels of public foreign assets, assigning portfolio management independence to the central bank may be advantageous. However, for a large enough foreign asset base, the opportunity cost associated with the limited portfolio diversification of the central bank induces authorities to establish a wealth fund in pursuit of higher returns.

Sovereign wealth funds: stylized facts about their determinants and governance

The establishment of the EU banking union reveals two major shortcomings of liberal intergovernmentalism. First, it fails to explain the preference formation of the most important actor – the German government. The banking sector was divided between public and private banks, and there is no clear-cut pattern about whose interests the German government promoted. Second, material bargaining power cannot account for German concessions despite favourable power asymmetries. This article seeks to demonstrate how an ideational frame can convincingly fill these gaps. Ordoliberal ideas were constitutive for German preferences. The manipulative use of ideas as strategic resources by the German government’s opponents explains why it made significant concessions. Germany’s government publicly acknowledged that breaking the ‘vicious circle’ between banks and sovereigns was the main objective of the banking union. This became a rhetorical trap used by a coalition of Southern European member states to force the German government to make concessions.

A banking union of ideas? The impact of ordoliberalism and the vicious circle on the EU banking union

PART I: SOVEREIGN RISK, POLITICS AND THE EUROZONE CRISISi. Introduction 1. Sovereign Risk, Developed Democracies and Financial Crisis 2. Sovereign Risk and the Debt Crisis in the Eurozone 3. The Focus of the Book 4. The Approach in the Book 5. Outline of the Book PART II: BOND SPREADS, EMU DESIGN AND THE RUN-UP TO THE CRISIS 1. Introduction 2. Adaptive Markets and Sovereign Risk Models 3. The Political Sources of Sovereign Credibility in Financial Markets 4. International Influences on Sovereign Risk Perceptions 5. Theoretical Pillars PART III: BOND SPREADS, EMU DESIGN AND THE RUN-UP TO THE CRISISi. Introduction 1. Government Bond Spreads and EMU Design 2. Greece and Ireland: The Macro and Political Economy 3. Politics and Spreads Before 2008 PART IV: THE GREEK SOVEREIGN DEBT CRISIS 1. Introduction 2. Evolving Investment Analysis and the Greek Sovereign Debt Crisis 3. Domestic Political Economy of the Greek Sovereign Debt Crisis 4. International Political Economy of the Greek Sovereign Debt Crisis 5. Key results from the Greek Case Study PART V: THE IRISH SOVEREIGN DEBT CRISIS 1. Introduction 2. Evolving Investment Analysis and the Irish Sovereign Debt Crisis 3. Domestic Political Economy of the Irish Sovereign Debt Crisis 4. International Political Economy of the Irish Sovereign Debt Crisis 5. Key results from the Irish Case Study PART VI: THE IPE OF THE EUROZONE SOVEREIGN DEBT CRISIS 1. Introduction 2. Lessons from the Greek and Irish Cases 3. Application to other Eurozone Sovereigns 4. Next Steps in IPE Research 5. Implications for Policy 6. Final Remarks

Sovereign Risk and Financial Crisis: The International Political Economy of the Eurozone

The Freefall That Isn't Free

Are the grand theories of integration still relevant today and capable of describing integration in the European Union? Have the general principles of the grand theories lost their ability to accurately describe European integration? For policy makers and scholars that rely on theories, the answer to these questions are of axiomatic importance Since 2012, steps towards a banking union provide the most contemporary and far reaching manifestation of European integration making the area ripe for studying these questions Focusing on the member states of the Eurozone adds relevance to the discussion, because the grand theories should apply more adeptly to this more highly integrated group To discern whether a single grand theory can account for present empirical findings, this paper relies upon a case study of the European banking union to test whether intergovernmentalism or neofunctionalism can properly account for evinced integrative outcomes The grand theories will be tested to see if they are capable of explaining the entirety of the integration process within their own logical confines Instead of an exhaustive approach that describes the preferences of each member state, coalitions will be curated to discern group negotiating preferences and taken alongside the actions of supranational actors to test the relevance of the grand theories of European integration

Monnet's Error or Intergovernmental Triumph: Examining the Formation of the European Banking Union

This paper will examine some fundamental shifts that have taken place in the international system of capitalism beginning with the Bretton Woods agreement and address the consequences these changes have had for both proactive and reactive governmental action, global trade, and economic integration. The analysis will utilize an interdisciplinary approach drawing upon the academic fields of Economics, Political Science, History, and Sociology. Additionally, I will draw selectively from portions of Regulation Theory and Social Structures of Accumulation Theory in order to show how crises of capital accumulation necessitate innovation in the global capitalistic system. Assumptions fundamental to structure of this paper include the premises that markets are institutions embedded in society, that global trade increases the interdependence of nations, that trade necessarily creates imbalances and those imbalances strain the interdependent relations between nations, and that globalization creates expected adherence to political and economic policies that potentially damage governmental legitimacy.I will demonstrate that the global capitalistic system creates antonymous pressures for nation states most readily identified by the competing ideological vantages points known commonly as Neo-liberalism and Keynesianism. The contradistinction underlying this supply-side/demand-side debate is evinced, in this paper, most poignantly in the financial system. This academic investigation hypothesizes that Sovereign Wealth Funds (SWFs) are instruments possessing the capabilities to alleviate these antithetic pressures. Although any determinative effects related to SWF proliferation concerning the stability of the international financial system remain ambiguous, this paper will conclude with normative suggestions as to how SWF investment activity can become a stabilizing force while warning of potential threats they hold inherent that can undermine the stability of the international financial system.

Pat M. Beck

Papers

Monnet's Error or Intergovernmental Triumph: Examining the Formation of the European Banking Union

An Analysis of Changing Trends in the International System of Capitalism Emphasizing the Role of Sovereign Wealth Funds