The power of economists in policymaking is widely recognized by both scholars and political actors. While the literature on expert influence has primarily focused on the intellectual features of expert arguments, we argue that economists' strategic use of framing and normative reasoning wields more influence in policymaking than is acknowledged by current scholarship. Through a comprehensive investigation into the institutionalization of the Norwegian Oil Fund and its associated fiscal regime, drawing on 26 elite interviews with key political and technocratic actors, we unveil the considerable influence of state economists in shaping the policy for managing petroleum wealth. These economists not only played a crucial role in legitimizing and lending credibility to the new policy but also employed strategic framing as a reinforcing mechanism to sustain the policy regime, illustrating the essential role of economists as storytellers. Hence, we suggest including strategic framing as a conceptual element within the theoretical framework of expert influence.

The European Central Bank played a key role in the financial and euro crises, as well as in the management of the economic fallout from the COVID-19 pandemic. The central bank's actions continue to be debated with the 2022 inflation problems and the energy crisis. The Bank has been criticised by some for doing "too little, too late", and by others for acting unlawfully or unjustly when it did act. The argument put forward in this chapter is that the euro crisis was a differentiating shock for the Eurozone, which gave rise to dominance effects. Examining the ECB's actions through the euro crisis and the pandemic, we argue that existing institutional biases, rooted in an idiosyncratic blend of functional, geographical, and hierarchical differentiation, opened the way to dominance when managing these crises. This dominance took the form of arbitrariness, exclusion (some Member States received help, not others) and illicit hierarchy. The more brutal effects of the illicit hierarchical power which the ECB exercised as an agent of austerity during the euro crisis are seemingly gone. Yet, Europe has no guarantee that this sort of behaviour cannot return. This is so because the ECB's policies are characterised – and increasingly so – by discretion, not rules. Its policies are arbitrary and hierarchical in the sense that Member States do not know if or when the ECB will act as a lender of last resort for them.

How should history judge the euro crisis and the way it was handled? Does it qualify as a policy fiasco in the sense that it was avoidable? Or could the crisis at least have been handled in a manner which substantially reduced its destructive impact on the economic and social welfare and politics of Europe? These questions necessitate counter-factual analysis. Nevertheless, they deserve attention. How history is interpreted impacts decisions about today and tomorrow. The article explores three discourses on economic governance: on financial stability, fiscal policy and on growth. Each discourse came with pathologies: they did not sensitize decision-makers to crucial negative consequences of the policy choices they privileged at decisive points in the sequence of boom, bust and (policy engineered) painfully slow recovery. The ECB has quietly changed its ways, but unwillingness to confront the crisis head-on as a policy fiasco can obstruct learning opportunities that are important for the EU and the Eurozone going forward.

The story of Iceland’s successful economic recovery from financial meltdown in 2008 is different from the rest of this book. Temporally, it deals with a dramatic episode of crisis management, not ongoing public policy. Furthermore, while the typical policy success refers to a circumscribed programme, a full-scale economic crisis demands that fires are put out all over the place. Iceland had to deal with foreign policy, the IMF, financial, economic and social issues, simultaneously. To do so it combined Keynesian crisis fighting means such as propping up demand and capital controls We deem Iceland’s ability to stop the largest financial meltdown in history (relative to GDP) from wreaking lasting real economic damage a policy success along all four dimensions specified by the (PPPE)-framework, although the political success experienced by those who handled most of the clean-up job turned out to be more precarious than what they would have hoped for.

AbstractThe Norwegian state’s ability to combine investing abroad, with relatively moderate and rule-based fiscal spending, compares favourably with most other cases where governance structures have been exposed to large resource-driven income streams. This chapter homes in on two critical junctures in the development of the Norwegian sSovereign Wealth Fund and shows how dilemmas found stable solutions through two conceptual innovations. Established in 1990, the fund’s institutional framework evolved, with the development of a fiscal rule in 2001 and ethical guidelines in 2004 as key decision points. The fiscal rule connecting expected real return and government spending is critical for Norway’s economic policy and the ability to balance spending versus the need to save and protect the non-petroleum sector. Ethical guidelines similarly relieved the Norwegian political system of a potentially debilitating tension between the aim of maximizing financial returns and ethical considerations. However, for 30 years it has been taken for granted that the interest of future generations equals wealth which in turn equals financial savings abroad. The climate agenda and the emerging consensus on the need for a green transition may challenge the terms upon which the two great dilemmas described in this chapter has been resolved until now.

Abstract The story of Iceland’s successful economic recovery from financial meltdown in 2008 is different from the rest of this book. Temporally, it deals with a dramatic episode of crisis management, not ongoing public policy. Furthermore, while the typical policy success refers to a circumscribed programme, a full-scale economic crisis demands that fires are put out all over the place. Iceland had to deal with foreign policy, the IMF, financial, economic and social issues, simultaneously. To do so it combined Keynesian crisis fighting means such as propping up demand and capital controls We deem Iceland’s ability to stop the largest financial meltdown in history (relative to GDP) from wreaking lasting real economic damage a policy success along all four dimensions specified by the (PPPE)-framework, although the political success experienced by those who handled most of the clean-up job turned out to be more precarious than what they would have hoped for.

The report of the public investigative commission was extremely well received by media, interest organizations and polit-ical bodies when released one year after the terrorist attacks of 22 July 2011. Upon closer reading, however, students of policing and public administration have argued that although meticulous and convincing in its depiction of events, it suf-fers from serious analytical deficiencies. How to make sense of this? Our point of departure is to distinguish between the emotional and the administrative needs that arise after a national disaster and trauma: Collective therapy versus admin-istrative and political reform. Thus, a dilemma and a paradox emerge. The dilemma is that in order to work therapeuti-cally and contribute to reconciliation, investigations of this kind must renounce analytical clarity somewhat. The paradox is that its therapeutic success conferred an administrative legitimacy on the report that its analytical deficiencies did not merit.

When the 2007 global financial crisis hit financial markets, European leaders were quick to point the finger at US markets, excessive risk-taking, and insufficient regulation. However, it soon became apparent that European banks were more exposed than their Wall Street counterparts. With massive dollar liabilities, European banks were dependent on the US to act as a global lender of last resort. The crisis revealed a level of transatlantic interdependence that had been unknown to most observers and policymakers prior to the crisis. We argue that this represents a paradox, given that the project of the European Monetary Union was partly motivated by a desire to make Europe more independent from the US dollar. The euro was a response to the challenge of ???it???s our dollar, but it???s your problem.??? In this article, we examine how the European vulnerability to the US dollar that began post-Bretton Woods did not, in fact, disappear with the creation of a European currency. Instead, through financialization and deregulation, European financial markets developed new, complex interactions with US financial markets. This financialization of transatlantic banking flows created a new type of interdependence. As European banks were so heavily invested in US markets, this gave the US authorities a direct interest in bailing them out. While cross-border banking flows have decreased since the crisis, the interdependencies remain, and currency swaps were used once again to handle the economic fallout from Covid-19. In the area of financial and monetary policy, the transatlantic relationship remains strong and stable within a dollar hegemony.

22. juli-kommisjonens rapport ble møtt med noe nær samstemt begeistring i media, fra høringsparter og i det politiske miljøet da den ble lansert i 2012. Rapporten framsto som grundig og ærlig, men etter nærlesing i enkelte politi- og fagmiljøer ble det etter hvert avdekket noen klare analytiske svakheter. Kan en rapport være både god og dårlig på en gang, og betyr det noe? Svaret på begge spørsmålene er ja. Vårt utgangspunkt er å skille mellom de emosjonelle og de administrative behovene som oppstår etter en nasjonal katastrofe: terapeutisk sorgbearbeiding versus forvaltningspolitisk læring. Vår påstand er at slik kommer ett dilemma og ett paradoks til syne. Dilemmaet er at hvis en utredning skal fungere terapeutisk, kan den ikke samtidig inneha alle de kvalitetene som kreves av en treffsikker forvaltningspolitisk analyse. Paradokset er at rapportens terapeutiske suksess ga den en forvaltningspolitisk legitimitet dens analytiske kvaliteter ikke gjør den fortjent til.

This chapter asks three questions: To what degree has the European financial and debt crises spurred new policies and purposeful action toward improved financial stability regulation? Secondly, how can we theorize the processes that link crises and policy? And thirdly, we ask if what has been achieved is likely to be sufficient to avoid another crisis? We measure policy change along three dimensions: level of aggregation, level of governance, and functional scope, and find significant change along the two first. This is explained by the “failing forward plus learning” framework that we develop. We do, however, find enough chinks in the EUs newly erected armour to predict that processes of failing forward will continue. Thus, we conclude that muddling through best describes the EU’s post-crisis efforts in financial stability regulation.

In economies abundant with natural resources, public leadership tends to lessen public value, diminishing assets that could benefit the population at large. The Norwegian macro-economic regime, balancing current spending with long-term interests, compares favourably to most other cases of large resource-driven income streams. While Norway had the institutional capability to reform, this policy is also an example of successful public leadership creating large public and social value. This chapter explores the role of public leadership in establishing the Petroleum Fund, and the relationship between political and administrative leadership. It finds that deft political leadership was vital in the three main government decisions that shaped Norwegian economic policy. In fact, the role of heroic leadership in the Fund’s history was larger than expected, although the key factor was a series of constructive interactions between political leaders and astute public managers.

Scandinavian countries are known for their universalistic welfare states, corporatist coordination, strong economic performances and egalitarian outcomes, an institutional combination often referred to as the 'Nordic model'. However, these countries also possess volatile and increasingly vulnerable housing markets characterised by periods of sharp increases in prices and rents and some of the highest debt to income ratios in the world. The combination of a universalistic welfare state and housing market dynamics sets off a self-reinforcing process of increased stratification and re-familialisation. How did these orderly, egalitarian and welfare-oriented societies end up with housing markets that expose their citizens to increasing risk while driving inequality? The key lies in the effect the Nordic welfare state has on financialised housing markets. Successful decommodification of human lives leads to generalised creditworthiness which stimulates asset price inflation and new wealth and risk inequalities.

In light of the growing importance of finance ministries and the financial dimension in policy-making, opening up the “black box” of fiscal bureaucracies is more warranted than ever. Our paper addresses the following research question: What kinds of roles can be assumed by fiscal bureaucrats in fiscal policy-making and budgeting? We propose four dichotomies that can be employed for examining the roles played by fiscal bureaucracies: 1) developers vs guardians; 2) initiators vs followers; 3) mediators vs insulators; 4) modellers vs estimators. In developing these dimensions, we juxtaposed the insights from various streams of institutionalist research and also on literature on public budgeting and public policy with the themes that emerged from the interviews we conducted in four different countries: Estonia, Latvia, Sweden and Norway. We find that fiscal bureaucracies in Estonia and Latvia tend to be closer to the guardian-insulator-estimator ends of the continuums, whereas the officials in Sweden and especially Norway lean towards the developer-mediator-modeller end of the scale. The division between the initiator vs follower roles is less clear-cut.

How and why did comparative political economy (CPE) lose sight of the sources of growing macroeconomic and political instability, a problem that encompassed a growing financial bubble and then a crash in the housing market, a period of sluggish growth that plausibly constitutes secular stagnation, and a crisis of political legitimacy manifesting itself in the rise of antisystem “populist” parties? A gradual shift in CPE’s research agenda from macroeconomic to microeconomic concerns, and from demand-side to supply-side explanations, diminished its ability to analyze adequately the central economic and political problems of the past twenty years. This article traces CPE’s evolution through successive “supermodels” that constituted its core research foci. To understand the current crisis, CPE needs to revisit and update its original roots in Keynes, macroeconomics, and the demand side. This shift is already happening at the margins, as CPE scholars struggle to understand the current crisis.