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The EU Budget Dispute – A Blessing in Disguise?

This paper analyses the current budget of the European Union and the relative position of the new member states. The author argues that the EU budget should be reconsidered, as the union has expanded to 27 member states and has become more heterogeneous. The budget priorities should be re-oriented toward growth enhancing spending programs. A simple economic growth model illustrates that the EU budget is, at best, neutral with respect to EU-wide long-term growth potential, and may actually hamper growth in the majority of member states if the distortionary nature of taxation is taken into account.

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Article provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.

Volume (Year): 57 (2007)
Issue (Month): 7-8 (September)
Pages: 304-323

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Handle: RePEc:fau:fauart:v:57:y:2007:i:7-8:p:304-323
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  1. 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.
  2. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  3. 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.
  4. Sandy Dall'Erba & Julie Le Gallo, 2007. "The impact of EU regional support on growth and employment," Post-Print hal-00485024, HAL.
  5. 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.
  6. Martin Hallet, 2004. "Fiscal effects of accession in the new Member States," European Economy - Economic Papers 203, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  7. 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.
  8. Gleich, Holger, 2003. "Budget institutions and fiscal performance in Central and Eastern European countries," Working Paper Series 0215, European Central Bank.
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