The debate on whether we are undergoing a paradigm change in economic policy is ubiquitous. While the end of neoliberalism was expected soon after the 2008 Great Financial Crisis, the management of the Great Recession showed its resilience in key economic assumptions that remained unquestioned. Nevertheless, policy innovation and incremental transformation of the Eurozone's architecture kept the interest alive of political economists that argued whether the creation of new institutions and the application of new policies eroded the dominant framework of economic policy making or simply modified it to ensure its survival. The COVID-19 pandemic was the perfect crisis to open again the debate on what kind of economy would serve the purpose of equitable growth and climate sustainability; a sense of urgency within European institutions and European capitals created an unprecedented momentum for reform that crystallized in the NextGenerationEU (NGEU) agreement following the pandemic crisis.
Despite this historic step in the long history of European integration we are still far from reaching a consensus on whether the old is dead, and something new is born. Fiscal rules and EU treaties remain the same, yet the European Central Bank has significantly changed its discourse and practice in the management of monetary policy. The adoption of unconventional policies, the declarations for an environmentally sustainable monetary policy, and the massive increase of the Central Bank's portfolio make the case for a new epoch in central banking. In parallel, the European Commission, once a cheerleader of austerity and competitiveness-enhancing structural reforms, now has shifted its opinions and recommendations towards member states asking for more active and discretionary fiscal policy to buffer the negative externalities of the pandemic and the energy crisis. With the NGEU funds member states are now investing in welfare state provisions, such as education and childcare to enhance economic resilience.
Are the changes we observe enough to make the case for a paradigm shift in European macroeconomic policy? To answer this question maybe we first need to settle on what constitutes paradigm change in the Eurozone framework. In other words, how and when can we be sure that we are beyond the Gramscian interregnum in macroeconomics; where is the locus of policy paradigm change and what are the actors involved in this process? These questions are crucial to map the variety of opinions held by technocrats and politicians regarding the overarching framework that guides economic policy making. They are also helpful in categorizing sweeping reforms and policy shifts that occurred the last decade in order to have a more symmetric academic debate on the Eurozone's macroeconomic governance.