Project C3:

“Strong” vs. “weak” governments and the challenge of economic reforms

 

Coordinator:

Prof. Dr. Wolfgang C. Müller

Associates:

Professor Dr. Hanna Bäck / Benjamin Nyblade, Ph.D.

 Duration:01.01.2018 - 31.12.2021

 


Summary

Project C3 focuses on governments and their willingness, capacity, and strategies to introduce structural reforms in the highly salient social, labor, taxation and economic policy domains. We investigate whether and when conditions in the composition (majority status and ideological conflict), internal organization and power distribution in cabinet and parliament (prime ministerial powers, ministerial discretion, oversight mechanisms), as well as the government environment (institutional veto players and the macroeconomic situation) facilitate or hinder economic reform-making across countries, time and policy areas. In the first two funding periods, Project C3 has built an unprecedented comparative dataset with more than 9,000 important reform measures in the social, labor, economic and taxation policy domains adopted by laws or executive decrees from 14 western and 8 eastern European countries over a period of up to 30 years (1980–2010). In addition, the dataset contains information on over 8,000 government reform ambitions mentioned in more than 330 government declarations. We used a detailed coding procedure to manually extract information on the substance and the direction of important government reform measures from more than 1,800 periodic reports issued by the Economist Intelligence Unit (EIU), and over 300 country surveys issued by the OECD. Our dataset contains important reform measures and excludes merely incremental legislative provisions. In the first and second funding periods, we focused on the data generating process, empirically evaluated our central theoretical expectations, and tested core theories in legislative reform-making. We aimed to uncover the factors that influence governments’ ability and willingness to introduce reforms and investigate various factors influencing policy change and policy stability (Angelova et al. 2017, Bäck et al. 2017a, Müller and Thurner 2017). In particular, we focused on the importance of veto powers in reform-making (Müller and Meyer 2010b), and evaluated the predictive power of veto player theory for policy change across countries and time (Angelova et al. 2017). We find that support for the expectations of the theory is limited to minimal winning cabinets. Our finding emphasizes the importance of opening the black box of policy-making in cabinet and parliament. We therefore concentrated on the internal organization of governments (Bergman et al. 2013, Ecker et al. 2015) and commitment problems in coalitions (Bäck and Lindvall 2015). In addition, we investigated the central role of prime ministers (PMs) (Bäck et al. 2017b), ministerial discretion and parliamentary oversight (Strøm, Müller and Smith 2010, Müller and Meyer 2010a, Bäck et al. 2017a), as well as coalition agreements (Bäck et al. 2017b) on the reform-making process, government spending and reform productivity in western European countries. Our data on reform measures also contains information on the substance and direction of reforms, which we use to study the electoral cycles and timing of austerity reform measures (Strobl et al. 2017). We also use this data to look at the impact of ideological preferences of government parties on government policy output (Hartmann 2015). Voter preferences and support are central aspects in the incentive structure of electorally accountable reform makers. We therefore also analyze voter perceptions of coalition policy positions (Meyer and Strobl 2016). Taking advantage of the German Internet Panel (GIP), in an ongoing collaboration with projects C1 and C2, we have launched survey questions, experiments and vignettes to test several assumptions about voting perceptions intrinsic to our core theoretical expectations. Clarity of responsibility is one major and disputed assumption in most decision-making theories (see Powell and Whitten 1993), which we analyze in collaboration with Project C1 (Angelova et al. 2016, Angelova 2017). In the third funding period, we will focus on theory testing and comparative analyses of the reform-making process, government reform productivity, reform output and fulfillment of government reform ambitions in western and eastern European countries. Upon finalization of the data generating process on eastern Europe, we will extend our reforms data up until 2017 to cover the post-2008 financial and economic crisis. This provides us with the unique opportunity to compare government reform-making prior to, and during, the crisis. We take advantage of existing external data and extend our research agenda by studying the importance of voters and intra-party politics (in collaboration with Project C2) for reform-making. We also plan for collaboration with Project C4, aiming to take our current hand-coding of country reports as a basis for dictionary-based machine learning. We will then use this for automated topic detection, topic scaling and ambiguity of government reforms reported in EIU reports on most remaining countries from all world regions. We will continue our involvement in the interdisciplinary collaboration between the economists and political scientists from the C and A group projects, where members from the A2, C1, C2, C3 and C6 projects prepare and analyze survey questions fielded within the GIP (Z1 project). We further envision various collaboration opportunities between the C3 and the A6 projects. Here we can fruitfully combine our government reform data with data collected by Project A6 on public opinion and interest groups’ positioning in social policy reforms (pension, health and unemployment). Our reform data will be released stepwise to the research community beginning at the end of the second period and will open various new interdisciplinary research avenues. Political scientists can use our reform data in many contexts that require political output data in the socio-economic realm. The data will also prove useful for scholars in economics and business, interested in, for instance, explaining (stock) market reactions to reform events. Finally, our reforms data may be used as input for machine-learning approaches (see above).