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In 2012, Draghi put an end to rising euro area sovereign bond yield spreads by resolving to do 'whatever it takes'. The crisis rhetoric and institutional practices of unlimited liquidity have since become commonplace, as countermeasures to recent market turmoil show. This article sets out to explain how and why 'unlimited liquidity' ideas moved to the ECB's center of economic analysis during the euro crisis. Previous work fails to decipher that the ideational shift was highly anomalous when viewed against German ordoliberalism or scholarly support for 'expansionary austerity'. Addressing this relative neglect in other accounts, we draw on qualitative text analysis and expert interviews to argue that this shift was due to norm entrepreneurs who capitalized on the uncertainty of the crisis. We employ constructivist arguments to identify four scoping conditions that account for the ascendance of 'unlimited liquidity': an indicative reference, credibility, institutional positioning and—as an extension to the literature—intellectual sensitivity. Our analysis suggests that the euro crisis changed economic ideas, and fundamentally remodels the constructivist framework for studying monetary policy in crisis times. [ABSTRACT FROM AUTHOR]

In light of the German government’s long-held preference against EU-wide fiscal burden-sharing, a hallmark of the Euro crisis, its support for an EU-wide debt-instrument during the COVID-19 pandemic constitutes a dramatic policy U-turn. To make sense of the ‘Berlin puzzle’, we develop a theoretical mechanism that explores why an initially reluctant German government heeded to the call for transnational fiscal solidarity: First, to avoid a ‘common bad’ of a large-scale economic contraction, proposals for an EU-wide fiscal response became a political imperative. Second, the successful framing of the crisis as ‘nobody’s fault’ rendered the call for European solidarity as the dominant standard of legitimacy to which all governments subscribed. Third, governments whose preferences were not aligned with this standard faced mounting normative pressure and isolation. As a result, governments changed their positions, but not their preferences. We probe this mechanism by carrying out a process-tracing analysis of the German government’s fiscal policy U-turn in the crucial months preceding the adoption of the Next Generation EU (NGEU) recovery plan in July 2020. The paper contributes to the growing literature on fiscal burdensharing in the EU by demonstrating when and how member states can change their stance on transnational fiscal burden-sharing. [ABSTRACT FROM AUTHOR]

Following the pandemic, the EU has responded to the threat of a euro crisis flare-up by deactivating its fiscal framework and establishing the Recovery and Resilience Facility, drawing on joint European bonds to finance national investments. This paper seeks to explain these modifications to fiscal governance and asks whether they are an indication of European austerity making way for an alternative fiscal paradigm. Based on a neo-Gramscian approach, it discusses the policies as parts of competing political projects that are promoted or hindered by certain framework conditions. The paper undertakes a structured comparison of these framework conditions during the euro crisis and the current crisis. It finds that geoeconomic competition increases the demand for a more active fiscal policy, while political preferences and structural relations remained remarkably stable. As the current crisis is marked by high inflation, economic conditions are adverse to a fiscally expansive agenda. The findings do not suggest a lasting reorientation of European fiscal governance. Instead, the measures taken during the pandemic are interpreted as expressions of 'passive revolution' in which the EMU adapts elements of a fiscal integrative agenda to provide necessary fixes to its economic order while keeping its underlying fiscally restrictive features intact. [ABSTRACT FROM AUTHOR]

By focusing on ECB's economic policy thinking and its internal politics of ideas, this research aims to provide two contributions to knowledge. Firstly, it seeks to enhance scholarly understanding of ideational change inside international organisations (IOs). To do so, it asks (a) how ECB's economic policy thinking has evolved since the outbreak of the euro crisis, and (b) what drives change in ECB's ideas on the best way to deepen Europe's Economic and Monetary Union (EMU) in its fiscal and economic realms. To answer these questions, fiscal policy, structural reforms and convergence towards resilient economic structures are used as case studies. The article argues that the interplay between changes in ECB's leadership and internal policy discussions promoted by ideational entrepreneurs played a pivotal role in enabling new ideas to emerge inside the Bank. Secondly, by interrogating ECB's ideas on the way to complete EMU, this research reflects on the future of the euro. It shares the view that the construction of cognitive authority within IOs is an ongoing political struggle over the ideas underpinning the everyday practice of global governance. By looking at the politics of ideas within the ECB, this article aims to contribute to the international political economy of EMU deepening. [ABSTRACT FROM AUTHOR]