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1. Causal Mechanism and Explanation in Social Science

Author:
Renate Mayntz
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
In the social sciences, the development of a specific social event or structure is often ex- plained by a statistical correlation between an independent variable and a variable assumed to be dependent upon it. This mode of explanation is contested by a methodology of causal reconstruction that operates with the concept of mechanisms. A mechanism is a process in which a set of linked steps leads from initial conditions to an outcome or effect. Mechanisms are general concepts, subjecting individual cases to a general category. Except for the litera- ture dealing specifically with the concept, the term “mechanism” is often used without defi- nition of its substantive content; there is no agreement with respect to the unique or plural character of the initial conditions, nor to the structure of the causal path leading to a specific outcome. Nevertheless, mechanisms have played a crucial role in detailed causal analysis of complex historical events, such as the financial crisis of 2008 and German unification of 1989.
Topic:
Cold War, Nationalism, Financial Crisis, and Unification
Political Geography:
Europe, Germany, West Germany, Central Europe, and East Germany

2. Causal Mechanism and Explanation in Social Science

Author:
Renate Mayntz
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
In the social sciences, the development of a specific social event or structure is often explained by a statistical correlation between an independent variable and a variable assumed to be dependent upon it. This mode of explanation is contested by a methodology of causal reconstruction that operates with the concept of mechanisms. A mechanism is a process in which a set of linked steps leads from initial conditions to an outcome or effect. Mechanisms are general concepts, subjecting individual cases to a general category. Except for the literature dealing specifically with the concept, the term “mechanism” is often used without definition of its substantive content; there is no agreement with respect to the unique or plural character of the initial conditions, nor to the structure of the causal path leading to a specific outcome. Nevertheless, mechanisms have played a crucial role in detailed causal analysis of complex historical events, such as the financial crisis of 2008 and German unification of 1989.
Topic:
Financial Crisis, Reconstruction, Unification, Social Science, and Mechanism
Political Geography:
Europe, Germany, and United States of America

3. What Germany should fear most is its own fear: An analysis of Target2 and current account imbalances

Author:
Paul De Grauwe and Yuemei Ji
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper analyzes two claims that have been made about the Target2 payment system. The first one is that this system has been used to support unsustainable current account deficits of Southern European countries. The second one is that the large accumulation of Target2 claims by the Bundesbank represents an unacceptable risk for Germany if the eurozone were to break up. We argue that these claims are unfounded. They also lead to unnecessary fears in Germany that make a solution of the eurozone crisis more difficult. Ultimately, this fear increases the risk of a break-up of the eurozone. Or to paraphrase Franklin Roosevelt, what Germany should fear most is simply its own fear.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

4. State of the union Can the euro zone survive its debt crisis?

Publication Date:
04-2011
Content Type:
Working Paper
Institution:
Economist Intelligence Unit
Abstract:
In the run-up to the global financial crisis, the euro area looked very much like a microcosm of the world economy. The region as a whole grew in line with its long-term trend, and its trade position with the outside world was broadly in balance. However, the euro area's aggregate position masked large variations across the member states. In some parts of the region (notably countries on the geographical periphery), demand grew consistently faster than output; in others (like Germany), the reverse was the case. Profligacy in the periphery was funded by thrift in the "core". This arrangement suited both sides.for a time at least. While countries in the periphery enjoyed debt-fuelled booms, countries such as Germany, where domestic demand was weak, could rely on exports to keep growing.
Topic:
Debt, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
Europe and Germany

5. Do Germans support the euro?

Author:
Daniel Gros and Felix Roth
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper analyses public support for the euro in Germany. Drawing from the results of regular Eurobarometer surveys, it finds that the ongoing financial and sovereign debt crisis has reduced support for the euro among German citizens, but not dramatically so – at least not yet. In the 1990s, the German public was sceptical towards the euro. But since the introduction of euro banknotes and coins, a clear majority of citizens supports the euro – despite the financial and sovereign debt crisis. Moreover, on average, support for the euro is at a similar level in Germany as it is elsewhere in the euro area.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

6. How Did the 2008 Economic Crisis Affect: Social and Political Solidarity in Europe?

Author:
Jennifer L. Hochschild
Publication Date:
01-2010
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
One possible outcome of the economic crash of 2008 was that the majority or mainstream members of a society would direct their anger and fear against the minority or marginal members of their society. Commentators on television or the radio would claim, "it's all the fault of the immigrants!" or "if we didn't hand over so much of our tax dollars to the poor, the economy would not have deteriorated so much," or "social benefits to African Americans [or German Turks] have distorted the housing market." Citizens would come to believe these assertions, politicians would echo them – and the upshot would be not only a deteriorating national and international economy but also increased hostility and fear among racial, ethnic, or nationality groups in a country. Social solidarity would decline, perhaps irrevocably.
Topic:
International Relations, Economics, Politics, Social Stratification, and Financial Crisis
Political Geography:
Africa, America, Europe, and Germany

7. The Effect of the Financial Crisis on Systemic Trust

Author:
Felix Roth
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The financial crisis had a significant impact on the levels of trust that citizens place in the system and its institutions. Recent data from Eurobarometer show a significant fall in confidence on the part of European citizens in the EU's institutions. For the first time since its creation, a majority of European citizens no longer trust the European Central Bank. However, confidence levels in national governments have actually risen, supporting a contrasting trend between confidence levels in European and national institutions. This decrease in confidence towards the ECB is flanked in the case of Germany by strong anti-capitalist sentiments and a sharp decline in support for the social market economy.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Europe and Germany

8. Eurozone Unity Under Threat?

Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Ten years after the introduction of the euro, the onset of deep recession in the Eurozone has triggered concern that the single currency might impose intolerable strains upon some members. With some countries hit hard by the impact of the credit crunch, there are mounting concerns about a possible debt default by one or more member states, which in turn might threaten the euro and even the existence of the Eurozone. With the Eurozone economy forecast to contract by 3.1% this year, unemployment is starting to climb steeply and fiscal deficits are soaring. This has raised concerns about deteriorating public finances in a number of countries, leading to sharply wider spreads on government bonds and credit rating downgrades for Greece, Spain and Portugal, with Ireland maybe facing a similar fate soon. And repercussions from the growing economic crisis in Central and Eastern Europe are adding to the problem, with Austria particularly exposed. Rising bond spreads were always intended to be the mechanism that would restrain public spending by more profligate Eurozone countries. But the question now is whether the weaker economies can withstand the strains that a lengthy period of recession will impose and, at the same time, adopt credible medium-term spending plans to ward off the worst of the downturn and retain market confidence. With fiscal deficits already rising as a result of bank bailouts, fiscal packages and recession will push budget deficits far above the 3% of GDP target – Ireland, facing a deficit of 12% of GDP, and Spain will be worst hit. And with rising deficits and higher bond spreads pushing up the cost of debt, countries face a sharp rise in their level of indebtedness, with Greece and Italy seeing debt/GDP ratios around 100%. This deterioration could lead to a further downward spiral if the recession is prolonged and will be a test of countries' euro commitment, which has remained strong thus far despite rising social tensions in some countries. At this stage, the problems remain manageable and the risk of default or of countries leaving the euro is still very low. Bond spreads are still much lower than during much of the 1990s, when countries were striving to qualify for euro membership, and the currency risks attached to leaving the euro would be substantial. Moreover, EU countries that have been exposed to considerable currency strain over the past year are anxious to join the Eurozone as soon as possible, to take advantage of the benefits of a stable currency. While some smaller countries may experience financial difficulties, it seems inevitable that the larger Eurozone members would step in to stabilise the situation – failure to do so would risk contagion spreading to other countries, which in turn would cause even deeper problems for the euro. More policy action also seems likely to counter this threat – although the German government will probably remain reluctant to countenance the scale of expansionary fiscal policy really needed at this time. Current policies inevitably mean a long hard slog back towards fiscal rectitude in the years ahead, with monetary policy also tightening and growth slower than previously expected. Fiscal federalism may also have to be on the agenda. All this will undoubtedly lead to ongoing strains within the Eurozone. And any measures by governments that appear to be protectionist – such as the support for the French car industry – will only fuel these tensions.
Topic:
Economics, International Trade and Finance, Regional Cooperation, Treaties and Agreements, and Financial Crisis
Political Geography:
Europe and Germany