Trust and Crisis Management in the European Union ― An Institutionalist Account of Success and Failure in Program Countries

This book addresses and explains the divergent economic and political outcomes of the financial
crisis in the eight European Union member states which needed a bailout program: Cyprus,
Greece, Hungary, Ireland, Latvia, Portugal, Romania and Spain. Looking at crisis management as
a series of relationships where cooperation is essential, this book focuses on the essential role of
trust during the process. It argues that the presence or absence of trust during the negotiation
and implementation of the bailout program leads to self-reinforcing cycles of success and
failure. The analysis of these eight countries also explores the institutional sources of trust – it
shows that a commitment to limited government is associated with both economic success and
resistance to populism. The final chapter considers the implications for the future of the EU and
calls attention to the importance of strengthening domestic institutions in order to bridge the
gap between concerns over moral hazard and expectations of solidarity.

Dora Gyorffy is Professor of international political economy at the Peter Pazmany Catholic University and the Corvinus University of Budapest, Hungary. She holds a BA in Government from Harvard University, an MA and PhD in International Relations from Central European University and a Doctor of Science degree in Economics from the Hungarian Academy of Sciences.

Gyorffy’s publications address fiscal consolidation and reforms, European monetary integration and financial crises. Her articles have appeared in English and Hungarian including in Acta Oeconomica, Hungarian Economic Review, Europe-Asia Studies, Post-Communist Economies, Society and Economy, and Zeitschrift fur Staats-und Europawissenschaften. She is author of two books: Democracy and Deficits: The New Political Economy of Fiscal Management Reforms (2007) and Institutional Trust and Economic Policy: Lessons from the History of the Euro (2013).