Comparative fiscal illusion: a fiscal illusion index for the European Union

This paper provides an empirical analysis of fiscal illusion by estimating an index of fiscal illusion for 28 European countries over the period 1995–2008 employing a structural equation approach. Using Multiple Indicators Multiple Causes models, the paper investigates the main indicators of fiscal illusion and develops an index of fiscal illusion. It concludes that the chief determinants for the deployment of fiscal illusion strategies are the share of self-employment on total employment, the educational level of citizens, and the size of tax burden. At the same time, policy makers attempt to ‘conceal’ the real tax burden by means of debt illusion, fiscal drag, wage withholding taxes, as well as taxes on labour.     

Regional mobility in the European Union

Regional mobility in the spatial distribution of per capita income in the European Union is examined over the period 1977 to 1999. The methodology used to investigate this issue combines a series of measures taken from the literature devoted to the dynamic study of personal income distribution with a non-parametric analysis. The results show limited mobility in the distribution considered, and a decline in mobility over time. The empirical evidence presented indicates, moreover, that mobility patterns vary as a function of regional development levels. Additionally, the analysis carried out investigates the role played in explaining intra-distribution mobility by variables such as per capita income, population density, per capita expenditure in investment, market potential, and the share in total employment of agriculture, advanced services and non-market services.     

The Economic Case for Monetary Union in the European Union

Differential requirements for seigniorage provide a weak case for retaining monetary independence. As regards adjustment to asymmetric shocks, nominal exchange rate flexibility is at best a limited blessing and at worst a limited curse. Absence of significant fiscal redistribution mechanisms among EU members is not an obstacle to monetary union. Neither is limited international labour mobility. Convergence of real economic performance is irrelevant for monetary union. A common currency is the logical implication of unrestricted capital mobility. The Maastricht criteria need not hinder monetary union provided the political will exists to adopt a flexible interpretation of the fiscal criteria.     

Out in the cold? Iceland's trade performance outside the European Union and European Monetary Union

Although entering currency (and customs) unions involve bothcosts and benefits, an increasing body of research is findingthat the benefits—in terms of international trade creation—areremarkably large. Focusing simply on the European Monetary Union(EMU) rather than the broad range of currency unions studiedby other authors, we find that the trade impact of EMU is smaller,but still substantial. Our findings suggest that the Iceland'strade could increase by about 60% and that the trade-to-GDPratio could rise by 12 percentage points should Iceland jointhe European Union and EMU.     

Proximity-sensitive individual deprivation measures

We characterize a generalization of the linear index of individual deprivation. Our class allows for an income increase of a higher-income individual to have a stronger impact the closer they occur to the income of the person under consideration.     

美日欧发展高新技术产业的比较研究

在全球竞争目益激烈的背景下,美日欧不断调整完善科技创新战略,加强重点领域研发,大力发展高新技术产业,培育新的经济增长点,以便在竞争中占据有利地位。通过从九大方面,包括产业发展战略模式、产业发展重点领域、法律保障、科技管理体制、科技投入、产学研合作模式、政府在科技成果转化和商业化中的作用、技术创新财税支持政策、科技人才政策等,对美日欧发展高新技术产业进行分析和比较．以期了解美日欧在发展高新技术产业中的做法和特点,使我国在发展高新技术产业中有所借鉴。     

Lobbying and innovation in the European Union

Aside from anecdotal evidence, lobbying activities and the role of vested interests in the EU have not been scrutinized. This article attempts to cast focus on the relationship between lobbying and aspects of innovation in the EU. The modest performance of the EU compared to the innovation frontier has been attributed to an array of factors, one of which is the adverse effect of vested interests. The lack of new, innovative enterprises has been identified as a decisive factor behind the productivity stagnation and lobbying by incumbents poses as a credible culprit. In this article, I create a novel firm-level database through the cross-fertilization of data from the growing Transparency Register (EC and EP), AMADEUS (BvD), the OECD, Eurostat, and the European Commission in order to address the complex relationship between vested interests, innovation, and competition. The preliminary findings indicate that more R&D intensive firms tend to spend significantly larger amount of funds on lobbying, primarily competing for EU grants and government procurement. Using data for country-sector concentration, I find that the relationship is stronger in the presence of low competition. Despite the improvements required in the documentation of lobbying activities, these results provide preliminary tangible evidence on the effect of vested interests on innovation performance.     

Ricardian fiscal regimes in the European Union

The prevalence of different fiscal regimes is important both for practical policy reasons and to assess fiscal sustainability, notably for European Union countries. The purpose of this article is to assess, with a panel data set, the empirical evidence concerning the existence of Ricardian fiscal regimes in EU-15 countries. The results give support to the Ricardian fiscal regime hypothesis throughout the sample period, and for sub-samples accounting for the dates of the Maastricht Treaty and for the setting-up of the Stability and Growth Pact. Furthermore, electoral budget cycles also seem to play a relevant role in fiscal behaviour.

Business Cycle Correspondence in the European Union

This paper examines whether there exists a close correspondence in the business cycles of the EU economies. We focus on the timing and magnitude of business cycles and propose criteria for defining close correspondence. We suggest that any correspondence that does exist is confined to the EU core and that, contrary to some of the existing literature, there exists a clear core-periphery distinction. This makes us less optimistic about the prospects for EMU if it is not accompanied by institutional arrangements that take into account the differences between EU economies.     

Interdependency and adjustments in the European Union

Since the euro was launched, divergences in European economies'evolutions have been more significant than generally expected. The article, based on a multinational macroeconomic model describing the interdependence between 14 European countries, examines the role played by relative‐price adjustment mechanisms and difficulties inherent in asymmetric evolutions.

The efficiency of relative‐price adjustment mechanisms seems limited and, even in the most flexible countries, the return to equilibrium is slow and still incomplete after 10 years. Differences in relative‐price adjustment mechanisms remain a source of asymmetries between member countries. Extra‐European exchanges have a stabilizing role which is uneven on account of trade openness and price elasticities. A decrease of the world demand and a depreciation of the euro, still have an important impact with significant disparities between countries.

Several lessons can be drawn in terms of economic policy. A more restrictive European fiscal policy proves more costly in the long run in Germany and the Netherlands on account of the weakness of price compensation effects. On the contrary, thanks to their greater flexibility, the United Kingdom and Sweden can offset an initial negative shock more rapidly. The wage dimension in the definition of a good European policy mix has also to be examined.     

The nonobserved economy in the European Union

To better understand the share of the nonobserved economy (NOE) in the European Union, especially on the PIIGS, we estimate, through the multiple indicators multiple causes model, the path between 1980 and 2013. The model includes (i) the tax burden (disaggregated into direct and indirect taxes), a proxy of regulation burden, the unemployment rate and self-employment as causes of the NOE economy; (ii) the GDP and the labour force participation ratio as indicators of the NOE economy. In particular, the estimated weight of NOE as a percentage of official GDP was always higher in the PIIGS group.     

Spatial models of logrolling in the European Union

This paper presents spatial models of logrolling in the EU. It analyzes the Commission appointment, logrolling and policy-making processes under the EU's principal legislative procedures: the consultation, cooperation and codecision procedures. The theory characterizes equilibrium EU policies and sets of successful policies, i.e., sets of policies that can become EU policy during the logrolling and policy-making processes. It also determines countries' optimal nomination strategies and countries' and legislators' optimal voting strategies during the Commission appointment process. It concludes that the EU institutions provide opportunities for efficient and stable exchanges of votes.     

The constitutional future of the European Union

The formal distinction between a treaty and a constitution is much less important than the question of who is authorized to interpret and amend it. The judges of the European Court of Justice interpret the Treaty by simple majority, while unanimity of the member-states would be required to reverse these decisions. The European Union needs a Court whose judges are empanelled from, and selected by, the highest courts of the member-states. The Treaty on European Union violates three fundamental constitutional principles: (i) the principle of the separation of powers, (ii) the democratic principle, and (iii) the principle of subsidiarity.     

Introduction: Postnational Politics in the European Union

During the Cold War, “buffer” or “bastion” seemed a popular metaphor to describe Turkey. After the Cold War, “bridge,” (and, to some extent, the “crossroad”) metaphor started to dominate the Turkish foreign policy D??course. This article traces the use of “bridge” metaphor in this D??course in the post-Cold War period by the Turkish foreign policy elite. It develops two arguments. First, the word bridge is a “metaphor of vision” combining Turkey's perceived geographical exceptionalism with an identity and a role at the international level. As a “metaphor of vision,” the employment of the word “bridge” highlighted Turkey's liminality and justified some of its foreign policy actions to Eurasia and then to the Middle East. Second, because the bridge metaphor was used in different context to justify different foreign policy choices, its meaning has changed, illustrating that metaphors are not static constructs. It concludes by Say?ng that the continuous use of “bridge” metaphor might reinforce Turkey's “liminality,” placing Turkey in a less classifiable category than the regular “othering” practices.     

Fiscal and regulatory federalism in the European Union

This contribution summarizes some quantitative results and presents relevant policy-oriented conclusions obtained from research program No. PBS91-0363. It is mainly supported by the Inter-ministerial Committee on Science and Technology of the Spanish government, which was carried out at the Public Finance and Public Sector Economics Research Unit of University of Valencia (Spain) to analyze, from a fiscal and regulatory point of view, the dynamic characteristics of federalism in the European Union. The research was performed in order to contribute to the establishment of the basis for the acceleration of the economic European integration and the future constitution of the United States of Europe.     

State Formation and Territoriality in the European Union

This article analyses the process of the expansion and integration of the EU from the perspective of a transformation to a competitive state formation. The recent construction of the EU is based on institutional arrangements which aim to combine different politics of scale with a general improvement of economic competitiveness and administrative efficiency. Recent theoretical advancement in state theory are applied in order to emphasise innovative aspects of European integration. After a concise overview about the history of the EU-territoriality and a discussion whether there is a spatial logic observable within the integration process the article outlines a political geography of the EU competition state and respective politics of scale. Finally the question of the future shape of the EU is re-addressed in light of strategic decisions to introduce a defensive or offensive flexibility.     

Institutional Reform and Co-Decision in the European Union

This paper studies the Treaty of Amsterdam's reform of the co-decision procedure in the European Union. The paper presents spatial models of the procedure, and examines whether the Treaty significantly alters it. The theory analyzes the implications of the Treaty for the equilibrium EU policies and the institutions' powers. It characterizes sets of policies the Commission can successfully propose under the old procedure, and sets of policies the Council and the Parliament can successfully propose as joint texts under the new procedure. The paper concludes that the new procedure does not lead to a further increase in the Parliament's powers, as intended by the drafters of the Treaty. Rather it finds that the Treaty eliminates the Commission's power under co-decision and may increase indecision.     

Migration and regional convergence in the European Union

We offer an empirical, econometric analysis of the impact of migration on the EU27’s NUTS2 regions in the period 2000–2007. We find that migration had no significant impact on regional unemployment in the EU, but affected both GDP per capita and productivity. A 1 percentage point increase in immigration to immigration regions increased GDP per capita by about 0.02?% and productivity by about 0.03?% on impact and by 0.44?% for GDP per capita and 0.20?% for productivity in the long run. For emigration regions an increase in the emigration rate leads to similar reductions of GDP per capita and productivity both on impact and in the long run. Since immigration regions are often regions with above average GDP, while emigration regions in Europe practically all have below average GDP, migration does not seem to promote convergence.     

Public service and competition in the European Union

In recent years, the Treaty of the European Union and the European institutions have had a rapidly increasing impact on the reorganization of commercial public services within the Member States. The trend has been dual—toward liberalization and toward harmonization of standards and national legislations. Progress is reported and analyzed in telecommunications, rail services, and electricity. A general concern is to reconcile legitimate public service obligations with the rules of competition that are prominent in the Treaty. New forms of regulation are tested in various countries preparing for the emergence of a European regulation framework.     

Issues in environmental justice within the European Union

This paper surveys pressing issues facing current and future social policies in the European Union (EU) at the juncture of social justice demands and environmental concerns. European policy-makers have in fact only recently acknowledged the notions of environmental justice and environmental inequalities, which have been part of the US policy arsenal for almost two decades. Yet, challenges to equality and fairness in the environmental domain are many and growing within the European Union. After having defined environmental justice and environmental inequalities in the European context, the paper addresses two contemporary dimensions of those challenges for EU social policies: vulnerability and exposure to environmental disaster and risk; and fairness in environmental taxation and the related issue of fuel poverty.