The authors study whether and to what extent EU countries implement recommendations on macroeconomic imbalances given by the EU in the so-called European Semester. Overall implementation of recommendations by EU countries has worsened in the last few years, in particular when it comes to recommendations addressed to countries with excessive macroeconomic imbalances.
Economic policy coordination in the EU hardly works: the implementation of economic policy recommendations made in the context of the European Semester was modest in 2011, and has deteriorated in each year since then.
The fundamental problem of economic policy coordination in the EU is that national policymakers are accountable to their national parliaments and focus on national interests, which in many cases differ widely in different member states. It is therefore not all that surprising that economic policy coordination in the EU hardly works.
This paper assesses economic policy coordination in the euro area under the European Semester. Despite the collective decision to create this new system of policy coordination, this paper shows that the European Semester has been rather ineffective.