Is Europe Going Too Far? / Alberto Alesina, Romain Wacziarg.

Format:

Book

Author/Creator:

Alesina, Alberto.

Contributor:

National Bureau of Economic Research.

Wacziarg, Romain.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6883.

NBER working paper series no. w6883

Language:

English

Subjects (All):

Sovereignty.

European Union countries--Economic integration.

European Union countries.

European Union countries--Economic policy.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Cambridge, Massachusetts : National Bureau of Economic Research, 1999.

Summary:

This paper examines the process of European political integration. We start with a political economy model of monetary policy, illustrating a general principle: economic integration requires setting up European institutions endowed with the authority to enact Europe-wide policies. However, when countries can take advantage of scale effects thanks to economic integration, the need for large countries is reduced. Thus increased economic integration reduces the need for political integration in Europe. To reconcile these views, we propose a model for the optimal allocation of prerogatives across levels of government. When the provision of public goods is characterized by cross-border spillovers, some centralization of policies may be needed to internalize the externality. These gains from centralization must be traded-off against the costs from imposing the same policies upon heterogeneous groups. The optimal allocation of prerogatives results from this trade-off. Using our model as a benchmark, we analyze the institutional incentives at play for the allocation of political prerogatives in Europe and conclude that the EU has gone too far on most issues.

Notes:

Print version record

January 1999.