Economic ideology in the European semester

Abstract

This paper examines how the European Commission’s policy ideas have shifted over the course of the European Semester, the European Union’s annual cycle of economic governance and policy coordination that has been in place since 2011. In doing so, it seeks to add to our understanding of the divergent fiscal policy responses in many EU countries to the global economic crises that followed the EU financial crisis and the Covid-19 crisis. Our analysis relies on a quantitative text analysis applied to a comprehensive suite of Semester documents that were published by the European Commission in the period from the aftermath of the financial crisis to present (2011-2022). We find evidence for a shift in the salience of economic ideology in these documents that over time has shifted from a more ordoliberal in a more Keynesian direction. We also observe country-specific differences in the country-specific reports with some countries Keynesian recommendations throughout the lifetime of the European semester, and other countries receiving distinctively ordoliberal recommendations. Our findings indicate that the EU’s fiscal policy response to Covid-19 has been underpinned by a gradual change in ideas among EU policymakers since the middle of the last decade.