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Voting Rules and Budget Allocation in an Enlarged EU

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  • Kauppi, Heikki
  • Widgrén, Mika

Abstract

The EU declares to provide support for the rural and poor regions of its member states. However, recent research shows that past EU budget allocations (in EU-15) can largely be explained by measures of the distribution of voting power in the Council of Ministers deciding on the bulk of EU spending. Yet, empirical analysis also indicates that the needs of the member states play a role in the determination of their receipts from the EU budget. As a rough estimate, power explains 60% of the budget allocation and, when stable coalition structures among member countries are allowed, even 90%. In this paper we use such estimates to predict EU budget shares after the eastern enlargement. We compare incumbent member states' predicted budget receipts before and after eastern enlargement, and examine the impact of different voting rule proposals on predicted budget shares and receipts in EU-25. According to our estimates, eastern enlargement has large effects on the budget receipts of the incumbent member states. Moreover, whether the voting rules are based on the Nice Treaty (NT) or the Constitutional Treaty (CT) makes a difference for most member states. Many member states would be worse off under CT than under NT. In relative terms, Germany would be the biggest winner under CT, because under CT population counts more on power than under NT voting rules.

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  • Kauppi, Heikki & Widgrén, Mika, 2005. "Voting Rules and Budget Allocation in an Enlarged EU," CEPR Discussion Papers 5134, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5134
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    Cited by:

    1. Deniz Aksoy, 2010. "Who gets what, when, and how revisited: Voting and proposal powers in the allocation of the EU budget," European Union Politics, , vol. 11(2), pages 171-194, June.
    2. Nikolaos Antonakakis & Harald Badinger & Wolf Heinrich Reuter, 2014. "From Rome to Lisbon and Beyond: Member States' Power, Efficiency, and Proportionality in the EU Council of Ministers," Department of Economics Working Papers wuwp175, Vienna University of Economics and Business, Department of Economics.
    3. László Á. Kóczy, 2010. "Strategic Aspects of the 1995 and 2004 EU Enlargements," Group Decision and Negotiation, Springer, vol. 19(3), pages 267-277, May.
    4. Zaporozhets, Vera & García-Valiñas, María & Kurz, Sascha, 2016. "Key drivers of EU budget allocation: Does power matter?," European Journal of Political Economy, Elsevier, vol. 43(C), pages 57-70.
    5. Kaniovski, Serguei & Mueller, Dennis C., 2011. "How representative is the European Union Parliament?," European Journal of Political Economy, Elsevier, vol. 27(1), pages 61-74, March.
    6. Mika Widgrén, 2008. "The Impact of Council's Internal Decision-Making Rules on the Future EU," Discussion Papers 26, Aboa Centre for Economics.
    7. J. Alonso-Meijide & C. Bowles & M. Holler & S. Napel, 2009. "Monotonicity of power in games with a priori unions," Theory and Decision, Springer, vol. 66(1), pages 17-37, January.
    8. Heikki Kauppi & Mika Widgrén, 2009. "The Excess Power Puzzle of the EU Budget," Discussion Papers 45, Aboa Centre for Economics.
    9. Kauppi, Heikki & Widgren, Mika, 2007. "Voting rules and budget allocation in the enlarged EU," European Journal of Political Economy, Elsevier, vol. 23(3), pages 693-706, September.
    10. García-Valiñas, Maria A. & Zaporozhets, Vera, 2015. "Key-drivers of EU budget allocation: Does power matter?," TSE Working Papers 15-548, Toulouse School of Economics (TSE).
    11. Jorge Núñez Ferrer & Jacques Le Cacheux & Giacomo Benedetto & Mathieu Saunier & Fabien Candau & Claude Emonnot & Florence Lachet-Touya & Jorgen Mortensen & Aymeric Potteau & Igor Taranic, 2016. "Study on the potential and limitations of reforming the financing of the EU budget
      [Perspectives et limites pour réformer le financement du budget de l’UE]
      ," Working Papers hal-01848029, HAL.
    12. Widgrén, Mika, 2008. "The Impact of Council Voting Rules on EU Decision-Making," Discussion Papers 1162, The Research Institute of the Finnish Economy.
    13. Badinger, Harald & Mühlböck, Monika & Nindl, Elisabeth & Reuter, Wolf Heinrich, 2014. "Theoretical vs. empirical power indices: Do preferences matter?," European Journal of Political Economy, Elsevier, vol. 36(C), pages 158-176.
    14. van Gruisen, Philippe & Crombez, Christophe, 2021. "The Commission and the Council Presidency in the European Union: Strategic interactions and legislative powers," European Journal of Political Economy, Elsevier, vol. 70(C).
    15. Massimo Bordignon & Simona Scabrosetti, 2016. "The Political Economy of Financing the EU budget," Working papers 42, Società Italiana di Economia Pubblica.
    16. Kai Gehring & Stephan A. Schneider, 2018. "Towards the Greater Good? EU Commissioners' Nationality and Budget Allocation in the European Union," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 214-239, February.
    17. Kauppi, Heikki & Widgrén, Mika, 2008. "Do Benevolent Aspects Have Room in Explaining EU Budget Receipts?," CEPR Discussion Papers 6778, C.E.P.R. Discussion Papers.
    18. Zineb Abidi & Matthieu Leprince & Vincent Merlin, 2020. "Power Inequality in Inter-communal Structures: The Simulated Impact of a Reform in the Case of the Municipalities in Western France," Post-Print halshs-02996998, HAL.
    19. Kauppi, Heikki & Widgrén, Mika, 2008. "Do Benevolent Aspects Have Room Explaining EU Bydget Receipts?," Discussion Papers 1161, The Research Institute of the Finnish Economy.
    20. Diego Varela & Javier Prado-Dominguez, 2012. "Negotiating the Lisbon Treaty: Redistribution, Efficiency and Power Indices," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 6(2), pages 107-124, July.
    21. Běla Plechanovová, 2011. "The EU Council enlarged: North-South-East or core-periphery?," European Union Politics, , vol. 12(1), pages 87-106, March.
    22. Loek Groot & Erik Zonneveld, 2013. "European Union Budget Contributions and Expenditures: A Lorenz Curve Approach," Journal of Common Market Studies, Wiley Blackwell, vol. 51(4), pages 649-666, July.
    23. Vera Zaporozhets & Mar'ia Garc'ia-Vali~nas & Sascha Kurz, 2015. "Key drivers of EU budget allocation: Does power matter?," Papers 1512.01267, arXiv.org.
    24. de Mouzon, Olivier & Laurent, Thibault & Le Breton, Michel, 2020. "One Man, One Vote Part 2: Measurement of Malapportionment and Disproportionality and the Lorenz Curve," TSE Working Papers 20-1089, Toulouse School of Economics (TSE).

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    More about this item

    Keywords

    constitutional treaty; EU budget; Treaty of Nice; voting power;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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