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The EU Budget Dispute – A Blessing in Disguise?

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  • Ondrej Schneider

Abstract

This paper analyses the European budget and the position of the ten new member states. We argue that the EU budget should be reconsidered, as the Union has expanded to 27 member states and has become more heterogeneous. The budget priorities must be re-oriented towards potentially productive spending programmes. A simple economic growth model illustrates that the current EU budget setting is, at best, neutral with respect to the EU-wide long-term growth potential and may actually hamper growth in the majority of the EU countries if the distortionary nature of taxation is taken into account.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-05/cesifo1_wp1986.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1986.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1986

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Keywords: budget; European Union; growth;

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  1. Sjef Ederveen & Henri L.F. de Groot & Richard Nahuis, 2002. "Fertile Soil for Structural Funds?," Tinbergen Institute Discussion Papers 02-096/3, Tinbergen Institute.
  2. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  3. Gleich, Holger, 2003. "Budget institutions and fiscal performance in Central and Eastern European countries," Working Paper Series 0215, European Central Bank.
  4. Ondrej Schneider & Jan Zapal, 2006. "Fiscal Policy in New EU Member States: Go East, Prudent Man!," Post-Communist Economies, Taylor & Francis Journals, vol. 18(2), pages 139-166.
  5. Asea, Patrick & Mendoza, Enrique G & Milesi-Ferretti, Gian Maria, 1996. "On the Ineffectiveness of Tax Policy in Altering Long- Run Growth: Harberger's Superneutrality Conjecture," CEPR Discussion Papers 1378, C.E.P.R. Discussion Papers.
  6. Martin Hallet, 2004. "Fiscal effects of accession in the new Member States," European Economy - Economic Papers 203, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  7. Urlik Butzow Mogensen & Patrick Lenain & Vicente Royuela-Mora, 2004. "The Lisbon Strategy at Midterm: Expectations and Reality," CASE Network Reports 0058, CASE-Center for Social and Economic Research.
  8. Sandy Dall’erba & Julie Le Gallo, 2007. "The Impact of EU Regional Support on Growth and Employment," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(7-8), pages 324-340, September.
  9. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
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