Domestic institutions and European monetary integration : the politics of monetary and fiscal convergence in Italy, 1992-1998
This thesis analyses how Italy succeeded in fulfilling the macroeconomic convergence criteria agreed upon at the Maastricht conference in late 1991. It is argued that economic policy reform in Italy between 1992 and 1998 has to be understood primarily as the result of two sets of factors: international financial and political pressure; and domestic political and socio-economic institutions. The institutionally grounded concept of 'executive strength' is regarded as particularly important, as 'weak' Italian governments had been the main reason for unsustainable economic policies in the past. Methodologically, the study uses an historical-institutionalist approach to explain institutional and policy reform. From both an empirical and theoretical perspective, successful macroeconomic convergence during the 1992-98 period represents an anomaly. Hence the study of successful policy reform can be regarded as a 'deviant case study' which is implicitly comparative in nature. The thesis analyses in a historically-detailed manner institutional and policy reforms in the four most relevant policy areas, that is, budgetary policy, pension reform, private and public sector wage policies, and monetary and exchange rate policy. It is argued that policy reforms in these four areas made an important contribution to monetary and fiscal convergence. The study finds that the obstructive character of domestic institutions - and especially executive weakness - was overcome thanks to international pressure. Nonetheless, domestic institutions continued to affect policy outcomes. By comparing the French and Italian macroeconomic policy regimes, the concluding chapter provides a second-line defence in favour of the domestic-institutional and 'executive strength' accounts.