Governing imbalances in the economic and monetary union A political economy analysis of the macroeconomic imbalance procedure

One of the key innovations to stabilise the euro area that has been introduced since the crisis is the Macroeconomic Imbalance Procedure (MIP). With the MIP, the European Commission makes an annual health check of the economies of the Member States to assess potential vulnerabilities and issues policy recommendations to address them. In this thesis David Bokhorst examines the extent to which the MIP manages to have an effect on a change of policies in Member States. He also asks to what extent the MIP constrains domestic democratic decision-making. By tracing the implementation process of different policy recommendations in five Member states, he shows that the MIP’s effects are mostly cognitive rather than substantive. It shows that while the MIP’s ability to have a direct effect on policy change is limited, it does have the ability to affect the way problems are defined and how much salience we should give to addressing them. Secondly, he shows that the MIP is not coercive, but it does increase the political costs of non-action. In general it shows that the MIP is not of such a nature as to heavily constrain democratic decision-making. At the same time, the thesis warns that we should be wary of proposals to reform the MIP that do.