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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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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. Ondřej Schneider & Jan Zápal, 2005. "Fiscal Policy in New EU Member States: Go East, Prudent Man!," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 76, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
  2. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, Elsevier, vol. 74(2), pages 171-190, November.
  3. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 201, University of Rochester - Center for Economic Research (RCER).
  4. 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, C.E.P.R. Discussion Papers 1378, C.E.P.R. Discussion Papers.
  5. Martin Hallet, 2004. "Fiscal effects of accession in the new Member States," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 203, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  6. Urlik Butzow Mogensen & Patrick Lenain & Vicente Royuela-Mora, 2004. "The Lisbon Strategy at Midterm: Expectations and Reality," CASE Network Reports, CASE-Center for Social and Economic Research 0058, CASE-Center for Social and Economic Research.
  7. Gleich, Holger, 2003. "Budget institutions and fiscal performance in Central and Eastern European countries," Working Paper Series, European Central Bank 0215, European Central Bank.
  8. Sjef Ederveen & Henri L.F. de Groot & Richard Nahuis, 2002. "Fertile Soil for Structural Funds?," Tinbergen Institute Discussion Papers, Tinbergen Institute 02-096/3, Tinbergen Institute.
  9. 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, Charles University Prague, Faculty of Social Sciences, vol. 57(7-8), pages 324-340, September.
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