To play or not to play the ‘moral hazard card’: Germany and the European Union’s response to the Covid-19 crisis

[en] Avoiding moral hazard is a recurrent argument of those seeking to limit the development of European financial support mechanisms. Germany has been the traditional leader of this coalition of actors in the European Union (EU). However, in reaction to the Covid-19 pandemic, Germany supported an EU response which included grants and massive debt issuance. What was previously presented as unacceptable – because of moral hazard – became appropriate. This contribution seeks to explain why the German government ceased to emphasise the moral hazard problem in EU economic governance. We argue that the answer is not because of a challenge to the relevance of moral hazard per se, or because the Germans lost interest in the moral hazard problem, but rather because German policymakers were discursively constrained by one of the dominant meanings of moral hazard they had previously imposed – which lost its relevance in the context of a symmetric exogenous shock.

Disciplines :

Political science, public administration & international relations

Author, co-author :

PIERRET, Laura ; University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) > Department of Social Sciences (DSOC) > Political Science

HOWARTH, David ; University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) > Department of Social Sciences (DSOC) > Political Science

External co-authors :

Language :

English

Title :

To play or not to play the ‘moral hazard card’: Germany and the European Union’s response to the Covid-19 crisis

Publication date :

24 October 2023

Journal title :

Journal of European Public Policy

ISSN :

1350-1763

eISSN :

1466-4429

Publisher :

Informa UK Limited

Pages :

1-25

Peer reviewed :

Peer Reviewed verified by ORBi

Additional URL :

https://www.tandfonline.com/doi/pdf/10.1080/13501763.2023.2270573

Funders :

University Association for Contemporary European Studies
James Madison Charitable Trust

Available on ORBilu :

since 26 October 2023

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