The introduction of the euro is accompanied by an independent European Central Bank (ECB) which is solely responsible for monetary policy in the euro zone. No European institution will be introduced to flank the ECB. This particular institutional design is problematic. This article argues that Economic and Monetary Union (EMU) suffers moderately from a democratic deficit. However, the case of Germany illustrates that it is not the independence of the ECB that should be cause for concern, but the absence of specific domestic features and a government. It is unclear which political authority will be held responsible if EMU leads to an uneven distribution of costs and benefits across the euro zone. Economic literature suggests that under EMU distortions could well occur and that a different design could deal better with these imperfections. The historical process leading to EMU explains the reasons for its particular design. Although imperfect, EMU is an improvement over the pre-EMU status quo in which Germany de facto dominated monetary policy. Nevertheless, the design of EMU remains suboptimal.

This article assumes that a central problem for effective implementation of European legislation is the impact of national administrative traditions, since the formal and practical transformation of EU law rests mainly at the national level. The article investigates the interplay of national administrative traditions and European policy implementation. National administrative traditions prevalent in a policy field may differ from country to country. It is argued, that implementation effectiveness depends on the ‘’institutional scope'' of European adaptation pressure, which is not only affected by European requirements, but also by the embeddedness of the respective administrative traditions and national capacities for administrative reform. According to the degrees of adaptation pressure, different paths are distinguished, suggesting more or less effective implementation.

The concepts of policy instruments and policy networks have played important roles in recent theoretical development on public policy, as research in several nations attests. These notions, however, have largely been considered in isolation from each other. Here a simple typology of policy networks is used to help explain the selection of different kinds of instruments by governments. Several instrument characteristics are considered for the expected impact of network features on instrument selection, and a set of propositions is developed that matches degrees of network interconnectedness and cohesion with the choice of different kinds of instruments – such as regulations, subsidies, and covenants. Examples from different national and policy-sectoral contexts are used to indicate the plausibility of the argument. The article suggests that considering network attributes can be useful in understanding governments' choice of instruments and can strengthen extant discussions largely focused on such variables as learning and policy style.

Inspired by the New Institutionalism in political science, the article examines the impact of political institutions on welfare state development in Switzerland. This article suggests that the strength of federalism and direct democracy have proved to be stumbling blocks for the expansion of the Swiss welfare state. Direct democracy and federalism have not only geared the path of welfare state evolution in a more liberal direction, but have also dampened social expenditures.

The transition from plan to market-driven economies of Central, Eastern and Southern Europe implied a major shift in their trade orientation. While before reform almost all trade took place within CMEA, in the mid-1990s trade relations are dominated by the OECD countries. This rapid change raises two questions: To what extent is the trade adjustment already accomplished? In case of a negative response, what factors account for observed differences in speed and pattern of this process among countries? From a comparison between actual and estimated potential trade flows in each year for 1988 to 1995, the econometric results suggest that the trade adjustment is far from being completed. Significant differences between countries can be explained by differences in the scope and speed of economic reform (such as liberalisation and macroeconomic stabilisation), differences in transactions costs (such as proximity to the West and previous market presence), and by differences in the demand and supply structure (such as economies of scale and differentiated trade structure). The results suggest a head-start for determined, sophisticated and proximate transition economies.

The paper examines three forms of budgetary rule applied to the food stamp program — discretion, entitlement, and expenditure caps. The different budget rules are modeled with respect to their reversion point, the outcome that prevails by default if no cooperative agreement is reached. Hypotheses concerning budgetary politics and policy are derived from the models and tested using historical data from one arena over time. The case study is relevant to the broader problem of welfare spending. The dilemma is how to reconcile budget protection needed for the impoverished against the fragmentation and fluctuations of routine political conflict, and budget integration needed for democratic deliberation regarding the multiple tasks of government. Entitlement status insures program benefits for qualifying households, but it also carves off a portion of total outlays declared to be relatively uncontrollable, outside of the annual mechanisms of review and adjustment. Discretionary budgeting, by contrast, incorporates welfare within ordinary collective decision-making that establishes priorities across competing claimants for public funds, but it also risks making the poor in society victims of their own vulnerability. Expenditure caps have recently been proposed as a solution to the dilemma, allowing outlays to grow automatically up to a given threshold but requiring conscious choice if they threaten to breach the threshold. Caps are celebrated by proponents as an instrument fostering enhanced managerial oversight and reasonable expenditure control. This study of the food stamp program, however, reveals that caps are more likely to engender procedural complexities and substantive policy bias. Moreover, these are logical and foreseeable results, easily deduced from the models of budgetary rule.

Environmental management typically involves multiple levels of government. Yet the intergovernmental context of environmental management in developing countries is seldom explored in the literature. This paper examines this issue by comparing the experiences in Guangzhou, Delhi, and Taipei, in which various types of unfavourable conditions create different problems for local regulatory enforcement. The study shows that, as commitment from the national government to local regulatory enforcement remains weak, the presence of local democratic institutions, legal remedies, and local environmental activism are key ingredients for checking against local enforcement slack. As legal remedies have various limitations, a bottom-up approach based on local flexibility, democratic processes, and environmental awareness and activism are more likely to bear fruit in the fight against pollution in developing countries.

The policy literature often mentions the agenda-setting influence of focusing events, but few policy studies systematically examine the dynamics of these events. This article closes this gap by examining focusing events, group mobilization and agenda-setting. Using natural disasters and industrial accidents as examples, most focusing events change the dominant issues on the agenda in a policy domain, they can lead to interest group mobilization, and groups often actively seek to expand or contain issues after a focusing event. I explain how differences in the composition of policy communities and the nature of the events themselves influence group and agenda dynamics. The organization of policy communities is an important factor in agenda setting, but agenda setting and group politics vary considerably with the type of event and the nature of the policy community.

My aim is to explore an important feature of public policy that has been somewhat neglected: many policies are largely made by the way of making other polices. To examine this idea and tentatively explore some of its implications, I shall employ the notion of ‘policy by the way’. What I wish to convey with the help of this concept is the reality of many areas of concern which are touched by public policy entirely or primarily by the way of focusing on other areas of concern. The notion of ‘policy by the way’ is anticipated in some key concepts of policy research and policy analysis, but its specific features still seem to deserve more focused attention. I gradually build up the notion of policy by the way with the help of well-known contributions to the field and a few examples from Israel, albeit no claim is made that Israel is in any way representative of other western democracies. It is quite possible, however, that the reality of public policy as a byproduct, which I believe is universal, is more easily discerned due to the special politics of Israel, basically, a fragile coalition government with strong turf orientation and weak coordination.

Firms are legitimate political actors, but few empirical studies examine how firms have re-structured their political organisation to maximise the political options in the constantly evolving European public policy system — or assessed the impact of these changes on the member states' industrial relations. Based on a study of Europe's largest firms, this article explores the degree to which the creation of the single market and the strengthening of European institutions has harmonised the firms' political activity across borders, sectors and issues. It concludes that multinationals have established a sophisticated political capacity that allows them to develop new multilevel and ad hoc political alliances and that this new political co-ordination has standardised political responses across issues and altered national public policy systems.

This paper presents an analytical framework for comparing patterns of devolution to subnational governments and autonomous social insurance institutions in social security systems. The framework has two components. One is an analysis of financial structures along the dimensions of financial autonomy (indicated by the extent to which the administering institution raises its own revenue or depends on central grants) and financial responsibility (indicated by whether marginal costs are borne by the administering institution). The other component of the framework concerns the assignment of policy-making power; in particular, we contrast the effects of competitive and cooperative modes of devolution. The discussion uses examples from Denmark, France, Germany, the Netherlands and the USA. While we looked for ‘principal-agent’ relationships between central governments and administering institutions, we found that more complex multi-level governance structures prevailed in most cases.

The article deals with the questions of the emergence, persistence and change of policy paradigms. It focuses on the role that policy networks play in this process and draws on the literature of problem definition to explain this role. The paper investigates water policy in Israel in the years 1948–1997. The paper distinguishes among two water policy paradigms that have prevailed: the earlier paradigm was one of expanding water resources and agricultural production, followed by a paradigm of priority of agricultural expansion over water conservation. The paper also distinguishes among periods of anticipatory and reactive water policy and highlights the role of policy networks in formulating public policies.