Enlargement versus Deepening: The Trade-off Facing Economic Unions
AbstractThis paper analyzes the relationship between the size of an economic union and the degree of policy centralization. We consider a political economy setting in which elected representatives bargain over the degree of centralization within the union. In our model strategic delegation affects the identity of the representatives and hence the equilibrium policy outcome. We show that the relationship between the size of the union and centralization may be non-monotonic: Up to a certain size enlargement leads to deeper integration, whereas beyond that size further enlargement implies less centralization. We also show that freezing the level of centralization and associate memberships can mitigate the trade-off.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 2.
Date of creation: 2008
Date of revision:
Fiscal Federalism; Policy Centralization; Political Economy.;
Other versions of this item:
- Oliver Lorz & Gerald Willmann, 2008. "Enlargement versus Deepening: The Trade-off Facing Economic Unions," CESifo Working Paper Series 2455, CESifo Group Munich.
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-18 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Torsten Persson & Guido Tabellini, 1990.
"The Politics of 1992: Fiscal Policy and European Integration,"
NBER Working Papers
3460, National Bureau of Economic Research, Inc.
- Persson, Torsten & Tabellini, Guido, 1992. "The Politics of 1992: Fiscal Policy and European Integration," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 689-701, October.
- Persson, Torsten & Tabellini, Guido, 1991. "The Politics of 1992: Fiscal Policy and European Integration," CEPR Discussion Papers 501, C.E.P.R. Discussion Papers.
- Robert Dur & Hein Roelfsema, 2005.
"Why does centralisation fail to internalise policy externalities?,"
Springer, vol. 122(3), pages 395-416, March.
- R Dur & H.J. Roelfsema, 2004. "Why does centralisation fail to internalise policy externalities?," Working Papers 04-09, Utrecht School of Economics.
- Robert A.J. Dur & Hein J. Roelfsema, 2002. "Why does Centralisation fail to internalise Policy Externalities?," Tinbergen Institute Discussion Papers 02-056/3, Tinbergen Institute, revised 11 Nov 2003.
- Alberto Alesina & Ignazio Angeloni & Federico Etro, 2005.
American Economic Review,
American Economic Association, vol. 95(3), pages 602-615, June.
- Alberto Alesina & Ignazio Angeloni & Federico Etro, 2003. "International Unions," Harvard Institute of Economic Research Working Papers 2001, Harvard - Institute of Economic Research.
- Etro, Federico & Ageloni, Ignazio & Alesina, Alberto, 2005. "International Unions," Scholarly Articles 4553008, Harvard University Department of Economics.
- Alesina, Alberto F & Angeloni, Ignazio & Etro, Federico, 2003. "International Unions," CEPR Discussion Papers 3913, C.E.P.R. Discussion Papers.
- John Wilson & Eckhard Janeba, 2003.
"Decentralization and International Tax Competition,"
CESifo Working Paper Series
854, CESifo Group Munich.
- Wilson, John Douglas & Janeba, Eckhard, 2005. "Decentralization and international tax competition," Journal of Public Economics, Elsevier, vol. 89(7), pages 1211-1229, July.
- Oliver Lorz & Gerald Willmann, 2004.
"On the Endogenous Allocation of Decision Powers in Federal Structures,"
Kiel Working Papers
1209, Kiel Institute for the World Economy.
- Lorz, Oliver & Willmann, Gerald, 2005. "On the endogenous allocation of decision powers in federal structures," Journal of Urban Economics, Elsevier, vol. 57(2), pages 242-257, March.
- Lorz, Jens Oliver & Willmann, Gerald, 2004. "On the Endogenous Allocation of Decision Powers in Federal Structures," Center for European, Governance and Economic Development Research Discussion Papers 25, University of Goettingen, Department of Economics.
- Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2005. "International Environmental Agreements and Strategic Voting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 175-195, 03.
- Redoano, Michela & Scharf, Kimberley Ann, 2002.
"The Political Economy of Policy Centralization: Direct Versus Representative Democracy,"
CEPR Discussion Papers
3631, C.E.P.R. Discussion Papers.
- Redoano, Michela & Scharf, Kimberly A., 2004. "The political economy of policy centralization: direct versus representative democracy," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 799-817, March.
- Michela Redoano & Kimberley Ann Scharf, 2001. "The Political Economy of Policy Centralization: Direct Versus Representative Democracy," CESifo Working Paper Series 602, CESifo Group Munich.
- Christina Schneider, 2007. "Enlargement processes and distributional conflicts: The politics of discriminatory membership in the European Union," Public Choice, Springer, vol. 132(1), pages 85-102, July.
- Anders Olofsgârd, 2004. "Secessions and Political Extremism: Why Regional Referenda Do Not Solve the Problem," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 805-832, 09.
- Guillaume Cheikbossian, 2000. "Federalism, distributive politics and representative democracy," Economics of Governance, Springer, vol. 1(2), pages 105-122, 07.
- Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002.
"Electoral Systems And Public Spending,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 609-657, May.
- Giovanni Facchini & Oliver Lorz & Gerald Willmann, 2006.
"Asylum seekers in Europe: the warm glow of a hot potato,"
Journal of Population Economics,
Springer, vol. 19(2), pages 411-430, June.
- Giovanni Facchini & Oliver Lorz & Gerald Willmann, 2005. "Asylum Seekers in Europe: The Warm Glow of a Hot Potato," Development Working Papers 205, Centro Studi Luca d\'Agliano, University of Milano.
- Michele Ruta, 2005. "Economic Theories of Political (Dis)integration," Journal of Economic Surveys, Wiley Blackwell, vol. 19(1), pages 1-21, 02.
- Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
- Harstad, Bård, 2010.
"Strategic delegation and voting rules,"
Journal of Public Economics,
Elsevier, vol. 94(1-2), pages 102-113, February.
- Libman, Alexander Mikhailovich, 2009.
"Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах
[ENDOGENOUS BOUNDARIES AND DISTRIBUTION O," MPRA Paper 16473, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Damiaan Persyn).
If references are entirely missing, you can add them using this form.