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Crisis and complementarities: a comparative political economy of economic policies after COVID-19

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  • Hancké, Bob
  • Van Overbeke, Toon
  • Voss, Dustin

Abstract

We examine economic policy responses to the COVID-19 induced economic collapse in Germany (a coordinated market economy) and the UK (a liberal market economy). The two countries responded to the symmetric economic shock with very similar furlough and business credit schemes to stabilize the demand and supply sides of the economy. However, since these policies fed into very different political-economic structures in both countries, they produced very different results. We attribute this divergence to the effect of “institutional complementarities,” the notion in Varieties of Capitalism that different elements of a system are mutually articulated and, therefore, mutually reinforcing beyond their initial contribution, or vice versa. Our results serve as a cautionary tale to policymakers that introducing policy elements developed in other institutional contexts is complex and challenge us to consider systematically the way in which institutional frameworks actively shape policy outcomes.

Suggested Citation

  • Hancké, Bob & Van Overbeke, Toon & Voss, Dustin, 2022. "Crisis and complementarities: a comparative political economy of economic policies after COVID-19," LSE Research Online Documents on Economics 111059, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:111059
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    File URL: http://eprints.lse.ac.uk/111059/
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    References listed on IDEAS

    as
    1. Coulter, Steve, 2020. "All in it together? The unlikely rebirth of Covid Corporatism," LSE Research Online Documents on Economics 106496, London School of Economics and Political Science, LSE Library.
    2. Richard M. Locke & Kathleen Thelen, 1995. "Apples and Oranges Revisited: Contextualized Comparisons and the Study of Comparative Labor Politics," Politics & Society, , vol. 23(3), pages 337-367, September.
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    More about this item

    Keywords

    Covid-19; coronavirus;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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