Every year, in the macroeconomic imbalances procedure (MIP), the European Commission examines the economic situation of member States, decides whether to launch an in-depth-review (IDR) and classifies countries into several categories, ranking from "no imbalances" to "excessive imbalances". The European Commission then releases some "specific country recommendations" (CSRs), detailing the economic measures to take to address the challenges and the imbalances.
This procedure has few equivalents in the world and, in that context, the question of the extent to which the pressure stemming from the MIP procedure can incite member States to implement reforms can be raised.
It is found that the pressure induced by the MIP classification is associated with more progress, whatever the regression used and whatever the controls.
Besides, if control variables' coefficients are not always significant depending on the regressions, their signs are as expected: difficult or politically/socially sensitive recommendations are associated with less progress, especially in the area of structural reforms and public finances. As regards political factors, progress is relatively less important when the mandates are getting close to their ends than for newly elected governments.