Who Sets the Rules of the Game in the EU's Economic Governance? Institutional Power in the European Semester from a Principal-Agent Perspective

This paper aims to afford insights into the capacity of member states and supranational institutions to control the European Semester. I focus especially on the institutional dimension of control, which is defined as the ability of an actor to shape the rules and the procedures of the coordination process. Drawing on a set of interviews with key EU and national officials as well as on a documentary analysis, I analyze the evolution (2012-2018) of the rules relating to the compliance with the Stability and Growth Pact and the Macroeconomic Imbalance Procedure as well as the procedural aspects of the European Semester (calendar and actors involved). I develop a theoretical framework that draws on rational choice institutionalism and the principal-agent model to argue that this evolution can be explained by two concomitant causal mechanisms: autonomization by the agent (European Commission) and control by the principal (Council). Using process-tracing methods, I trace these mechanisms in order to provide a new and more dynamic account of the inter-institutional balance in the EU’s economic governance.