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Political Economy

Our research themes 

Research in Political Economy in Europe concentrates on the interaction between political and economic processes in Europe. We study these interactions in different areas.

In the monetary field there is the interaction between the sovereign debt crisis in the Eurozone, the political responses to the crisis and the institutional reforms that the evolving crisis have imposed on the Eurozone. In the field of international political economy we focus on the EU’s foreign economic policies and the EU’s role in shaping global economic regimes such as the international investment regime or the World Trade Organization. We study how different social models affect the workings of capitalism and how the different varieties of capitalism in turn influence social models. Another area of research relates to the interaction between the labour market institutions and the economic governance of the EU and the Eurozone.

The EU in the Global Investment Regime

by Johann Robert Basedow

Book_The_EU_in _the_Global_Invetsmet-Regime

The EU in the Global Investment Regime provides an accessible introduction to international investment policy and seeks to explain how the EU became an actor in the global structure. It offers a detailed analysis of the EU’s participation in all major trade and investment negotiations since the 1980s and EU-internal competence debates to identify the causes behind the EU’s growing role in this policy domain.

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The Limits of the Market: The Pendulum Between Government and Market

by Paul de Grauwe

limits of the markets

The old discussion of 'Market or State' is obsolete. There will always have to be a mix of market and state. The only relevant question is what that mix should look like. How far do we have to let the market go its own way in order to create as much welfare as possible for everyone? What is the responsibility of the government in creating welfare? These are difficult questions. But they are also interesting questions and Paul De Grauwe analyses them in this book.

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The Political Economy of Monetary Solidarity: Understanding the Euro Experiment

by Waltraud Schelkle

schelkle book cover

Creating the European monetary union between diverse and unequal nation states is arguably one of the biggest social experiments in history. This book offers an explanation of how the euro experiment came about and was sustained despite a severe crisis, and provides a comparison with the monetary-financial history of the US.

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Economics of the Monetary Union

by Paul de Grauwe 

Economics of Monetary Union

The 12th edition of Economics of Monetary Union provides a concise analysis of the theories and policies relating to monetary union. Paul De Grauwe analyses both the costs and benefits associated with exiting the eurozone, as well as presenting a discussion of the banking union, the current issues surrounding the TARGET2 payment system, and the role of the European Central Bank. In Part One, Paul De Grauwe examines the implications of adopting a common currency, assessing each country's benefit from being a member of the eurozone, while also questioning whether other parts of the world would gain from monetary unification. Part Two of the book looks at the problems of running a monetary union by analysing Europe's experience and the issues faced by the European Central Bank.

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The Political Econonomy of Structural Reforms in Europe

by Paul de Grauwe

the political economy book

Reforms in labour and product markets play a central role in government policies. The issue of whether structural reforms lead to higher economic growth remains controversial. Researchers in this field tend to agree on the positive role that reforms could play in driving growth as a result of efficiency gains and technological progress. However, reforms may have some negative impacts. One concern is about the timing: structural reforms may not be effective but turn out to be negative when the economy is in a recession and demand is weak. The other concern is structural reforms may lead to income inequality which weakens political support for further reforms. These topics have, in the context of globalization and European integration, attracted great research interest among scholars. This book provides an assessment of past progress and takes stock of current frontier work.

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Key Research Themes

  • Rethinking EMU and economic governance
  • European capitalism(s) and European social model(s)
  • EU foreign economic policies – in particular international trade and investment protection
  • Economic migration, labour markets and population dynamics
  • Welfare including pension reform
  • Fiscal austerity and new sources of economic growth
  • Employment relations, labour market performance and institutional reform
  • Regional policy, industrial structure and economic development
  • East-west international division of labour

Selected publications 

Basedow, Robert (2021) ‘Why De-Judicialize? Explaining State Preferences on Judicialization in World Trade Organization Dispute Settlement Body and Investor-to-State Dispute Settlement Reforms’, Regulation & Governance.

Begg, I. (2021) ‘One Instrument, Many Goals: Some Delicate Challenges Facing the EU’s Recovery Fund’, CESifo Forum 22.1, 9-13.

Begg, I. (2021) ‘The European Union and regional economic integration: Creating collective public goods – Past, present and future’, European Parliament Think Tank.

Begg, I. (2021) ‘The post Covid-19 new normal, a time for the decidedly abnormal: an opportunity for modern monetary theory?’, Funcas Europe Policy Note.

Begg, I. (2021) ‘New era, new strategy: the ECB’s revised approach to monetary policy’, Funcas Europe Policy Note.

Bob Hanclé, Toon Van Overbeke & Dustin Voss (2021) ‘Crisis and Complementarities: A comparative political economy of economic policies after Covid-19’, Perspectives on Politics June 2021.

Costa Storti C, Bretteville-Jensen A, L, De Grauwe P, Moeller K, Mounteney J, Stevens A: The Double Effect of COVID-19 Confinement Measures and Economic Recession on High-Risk Drug Users and Drug Services. European Addiction Research, 2021.

De Grauwe, P., and Ji, Y., (2021), Toward a sustainable Eurozone, in Pereira, L, Mata, M., de Sousa, M., (eds.), Economic Globalization and Governance. Essays in honor of Jorge Braga de Macedo, Springer Verlag.

De Grauwe, P. and Ji, Y., (2021), 'The quest to stabilize an unstable system by financial engineering', Journal of Common Market Studies. 

De Grauwe, Paul (2021), 'Debt cancellation by the ECB: does it make a difference?', SUERF Policy Brief, no. 55. 

De Grauwe, Paul (2021) 'Inflation risks?', Intereconomics,  

Barr, Nick (2020) The Economics of the Welfare State, 6th edition, Oxford and New York: Oxford University Press.

Basedow, Robert (2020) ‘The EU’s International Investment Policy Ten Years on: The Policy-Making Implications of Unintended Competence Transfers’, Journal of Common Market Studies.

Basedow, Robert (2020) ‘The Achmea Judgment and the Applicability of the Energy Charter Treaty in Intra-EU Investment Arbitration’, Journal of International Economic Law 23, no. 1.

Basedow, Robert (2020) ‘The European Union’s New International Investment Policy and the United Nation’s Sustainable Development Goals’. In International Trade, Investment and Sustainable Development. Cambridge: Cambridge University Press.

Begg, I. (2020) ‘Responses to the COVID-19 Economic Crisis: Challenges for Global Governance’, Global Perspectives 1.1.

De Grauwe, Paul (2020) Economics of Monetary Union, 13th Edition, Oxford University Press. 

De Grauwe, Paul and Ji, Yuemei (2020) 'Structural reforms, animal spirits, and monetary policies', European Economic Review, 124.

Featherstone, Kevin (2020) ‘Enhancing Europe’s Global Power: A Scenario Exercise with Eight Proposals', Global Policy, 11,1, February, pp. 128-142.

Innes, Abby (2020) 'The limits of institutional convergence: why public sector outsourcing is less efficient than Soviet enterprise planning', Review of International Political Economy.

Monastiriotis, Vassilis and Zilic, Ivan (2020) 'The economic effects of political disintegration: Lessons from Serbia and Montenegro', European Journal of Political Economy, vo.65.

Barr, Nick (2019) Gender and Family: Conceptual Overview, Social Protection and Jobs Discussion Paper No. 1916. May 2019, Washington, DC: World Bank Group, 

Schelkle, Waltraud (2019), Independent or lonely? Central banking in crisis. Review of International Political Economy, 26(3), 1-25, 2019. (With Mabbett, D.)

Schelkle, Waltraud (2019) EU Pension policy and financialisation: purpose without power? Journal of European Public Policy, 1-18, 2019.

Academic Staff working in this area 


Swedish pension system - Nicholas Barr

The Swedish pension system is widely studied and has become an exemplar for other countries. At the request of the Swedish government, Nicholas Barr provided an external evaluation of their system. As a direct result of his report, Sweden is introducing two reforms that assist its 2.25 million pensioners.
- The minimum pension age will rise over time to reflect rising life expectancy.
- The Premium Pension (in which workers choose from over 800 private pension providers) offers too much choice, so the number of funds will be substantially reduced.

These changes matter because they improve old-age financial security. The first reform protects the ability to continue to finance adequate pension benefits. The second, by reducing administrative costs increases net pensions.

Finland, also following recommendations by Barr, increased pension age and introduced more options to combine partial pension with continuing work for its 1.6 million pensioners.

Greek labour market - Vassilis Monastiriotis

As the economic crisis in Greece unfolded in 2010, Vassilis Monastiriotis undertook a programme of research on the adjustment of the Greek labour market to the crisis and to the subsequent policy reforms. In a series of papers, he provided original evidence showing that private sector wage adjustments mirrored those in the public sector, compressing wages in particular at the bottom of the distribution (Christopoulou and Monastiriotis, 2014 British Journal of Industrial Relations and 2016 Oxford Economic Papers); that unemployment adjustments were disproportionately concentrated on the low-skilled (employment sorting on the basis of education – Monastiriotis and Martelli, 2020 International Regional Science Review); and that changes in the minimum wage had a limited impact on employment but sizeable income effects for those earning below-median wages (Georgiadis et al, 2020 Economics Letters). This body of research led to Dr Monastiriotis’ appointment to the Minimum Wage Committee in 2018 and influenced directly the government decision to raise the MW in Greece by 10.8% in February 2019. In line with the predications stemming from his research, the rise in the MW improved individual outcomes for the low-paid and reduced significantly their risk of poverty – raising the wages of an estimated 600,000 individuals (approximately 30% of private sector employees) with no adverse effects on the economy, as unemployment continued to fall uninterrupted and economy-wide wage-costs increased only marginally.