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Subsidiarity and the European Union

  • Robert P. Inman
  • Daniel L. Rubinfeld
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    The European Union is at a crossroads. At issue will be each of the three decisions which define a federal constitution: the number of participating governments, the assignment of policy responsibilities to the new EMU, and the representation of local interests in, and the decision-making rules for, the Union. Subsidiarity is to be the guiding principle. This essay reviews three alternative models of subsidiarity -- decentralized federalism, centralized federalism, and democratic federalism -- and argues the current European Economic Community has evolved from decentralized to centralized to a fully democratic federalist state. The structure of EMU governance is in place and it closely resembles that of the United States: an institutionally weak executive, a country-specific Council of Ministers and a locally representative Parliament. The remaining issues to be decided are the number of participating members and the assignment of policy responsibilities to levels of government. A large Union with significant fiscal policy responsibilities is likely to replicate U.S. economic policy performance.

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    File URL: http://www.nber.org/papers/w6556.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6556.

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    Date of creation: May 1998
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    Handle: RePEc:nbr:nberwo:6556
    Note: IFM
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    1. Tim Besley & Stephen Coate, . ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
    2. Bayoumi, Tamim & Eichengreen, Barry, 1992. "Shocking Aspects of European Monetary Unification," CEPR Discussion Papers 643, C.E.P.R. Discussion Papers.
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    4. Sen, Amartya, 1988. "Freedom of choice : Concept and content," European Economic Review, Elsevier, vol. 32(2-3), pages 269-294, March.
    5. Eichengreen, Barry, 1993. "European Monetary Unification," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1321-57, September.
    6. Mathias Dewatripont & Francesco Giavazzi & Jürgen von Hagen & Ian Harden & Didier Baudewyns & Gérard Roland & Howard Rosenthal & André Sapir & Guido Tabellini, 1995. "Flexible integration: towards a more effective and democratic Europe," ULB Institutional Repository 2013/9541, ULB -- Universite Libre de Bruxelles.
    7. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-33, November.
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    9. Inman, Robert P. & Rubinfeld, Daniel L., 1994. "The EMU and fiscal policy in the new European Community: An issue for economic federalism," International Review of Law and Economics, Elsevier, vol. 14(2), pages 147-161, June.
    10. Inman, Robert P & Fitts, Michael A, 1990. "Political Institutions and Fiscal Policy: Evidence from the U.S. Historical Record," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(0), pages 79-132.
    11. Bednar, Jenna & Ferejohn, John & Garrett, Geoffrey, 1996. "The politics of European federalism," International Review of Law and Economics, Elsevier, vol. 16(3), pages 279-294, September.
    12. Laffont, Jean-Jacques, 1987. "Incentives and the allocation of public goods," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 10, pages 537-569 Elsevier.
    13. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December.
    14. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
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