Papers on the Political Economy of the European Union Open Access

Abstract

This dissertation consists of three papers on the political economy of the European Union (EU). The central theme is how political institutions shape noncompliance.

In the first paper, I study how the politics of adjudication affect the implementation of policy. Under what conditions do government agencies more closely implement laws, and when do courts deter incorrect implementation? I model the strategic interaction between an implementing actor, a plaintiff, and a court over the implementation of a law. Implementing actors make concessions by implementing more complaint policies in order to avoid litigation. Courts are most effective at deterring noncompliance for intermediate levels of preference divergence between policy-makers and implementing actors. I test the observable implication of the model in the context of the EU using a novel dataset of implementation opportunities and noncompliance cases.

In the second paper, I study noncompliance in common markets. States create common markets to accrue consumer welfare gains. Given incentives to cheat to protect domestic firms from foreign competition, they create international regulatory regimes to manage noncompliance. I develop a formal model that explains how the politics of compliance in regulatory regimes systematically distorts the welfare gains that states accrue from developing common markets. The model predicts that regulatory regimes are most effective at enforcing compliance in sectors with intermediate levels of firm homogeneity in terms of productivity. The model also predicts the downstream consequences for the performance of individual firms and consumer welfare.

In the third paper, I study the how individuals evaluate complex economic policies. To what extent are aggregate preferences over complex economic policies consistent with individual rationality? This question has far-reaching implications for the coherence of economic policy. In this paper, I theorize how a rational individual would evaluate the following policy: Commission monitoring of member state compliance with the Stability and Growth Pact (SGP), which governs the European Economic and Monetary Union (EMU). I present empirical evidence from the European Sovereign Debt Crisis that, in a high-information environment, individuals express preferences over Commission monitoring that, in the aggregate, are consistent with individual rationality.

Table of Contents

1 Policy Implementation, Noncompliance, and the Judicial Impact of Courts ..... 1

1.1 Introduction ..... 2

1.2 The Strategic Behavior of Courts ..... 3

1.3 Formal Model ..... 5

1.3.1 Order of Play ..... 6 

1.3.2 Preferences ..... 9 

1.3.3 Equilibrium Behavior ..... 10 

1.3.4 Comparative Statics ..... 14

1.4 Empirical Analysis ..... 19 

1.4.1 Research Design ..... 20 

1.4.2 Measuring Preference Divergence ..... 22 

1.4.3 Estimation and Analysis ..... 25

1.5 Conclusion ..... 30

2 The Political Economy of Noncompliance in Common Markets ..... 33

2.1 Introduction ..... 34

2.2 International Regulatory Regimes ..... 36

2.3 Formal Model ..... 39

2.4 An Open Regional Economy ..... 40

2.4.1 Demand ..... 41 

2.4.2 Supply ..... 42 

2.4.3 Open Economy Equilibrium ..... 43 

2.4.4 Comparative Statics ..... 44

2.5 Adding Strategic Policy-Making ..... 45

2.6 Adding an International Regulatory Regime ..... 49

2.6.1 Litigant Preferences ..... 52

2.6.2 Regulatory Regime Equilibrium ..... 52

2.6.3 Systematic Bias in Noncompliance Cases ..... 54

2.6.4 Distributive Consequences and Consumer Welfare Gains ..... 59

2.7 Conclusion ..... 64

3 Rationality in the Public’s Evaluation of Economic Policy: Evidence from the European Sovereign Debt Crisis .....66

3.1 Introduction ..... 67

3.2 The Substantive Application ..... 70

3.3 Theory ..... 72

3.3.1 Independent Variables ..... 73

3.3.2 Hypotheses ..... 78

3.4 Empirics ..... 83 

3.4.1 Measurement ..... 84 

3.4.2 Descriptive Statistics ..... 86 

3.4.3 Estimation Strategy ..... 89 

3.4.4 Analysis and Findings ..... 90 

3.4.5 Challenges to Inference ..... 94

3.5 Conclusion ..... 98

Bibliography ..... 100

A Appendix for Paper 1 ..... 111

A.1 Proof of Lemma 1 ..... 111 

A.2 Proof of Lemma 2 ..... 111 

A.3 Proof of Proposition 1 ..... 112 

A.4 Proof of Proposition 2 ..... 112 

A.5 Proof of Proposition 3 ..... 113 

A.6 Computational Proofs of Results 1-5 ..... 114

B Appendix for Paper 2 ..... 126

B.1 Proof of Proposition 1 ..... 126 

B.2 Proof of Proposition 2 ..... 139 

B.3 Proof of Proposition 3 ..... 140 

B.4 Computational Proof of Proposition 4 ..... 141 

B.5 ComputationalProof of Result 1 ..... 151 

B.6 Computational Proof of Result 2 ..... 159 

B.7 Computational Proof of Results 3-6 ..... 167

About this Dissertation

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School	Laney Graduate School
Department	Political Science
Degree	Ph.D.
Submission	Dissertation
Language	English
Research Field	Political Science, International Law and Relations Political Science, General
Keyword	European Union Common markets Noncompliance Policy implementation International courts
Committee Chair / Thesis Advisor	Clifford J. Carrubba, Emory University
Committee Members	Adam N. Glynn, Emory University B. Pablo Montagnes, Emory University Matthew J. Gabel, Washington University in St. Louis

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