Redistribution and stabilisation through the EU budget
Pasimeni, P., & Riso, S. (2018). Redistribution and stabilisation through the EU budget. Economia Politica, 36(1), 111-138. https://ideas.repec.org/a/spr/epolit/v36y2019i1d10.1007_s40888-018-0136-0.html
28 Pages Posted: 7 Aug 2018 Last revised: 20 Nov 2020
Date Written: November 8, 2016
This paper measures the capacity of the EU budget to operate two traditional functions of public finances: redistribution and stabilisation. It uses a large dataset covering all actual revenues and expenditures of the budget, over 16 years (from 2000 to 2015) in each Member State of the EU. It finds that, for every € 1000 difference in income per capita across the EU, € 9 is offset by lower contributions to the budget and € 3 is offset by higher expenditures by the budget; the overall equalising effect is small and mainly generated by the revenue side, in particular by the national contribution based on GNI and VAT. The budget is not particularly responsive to changing economic conditions: a fall in income per capita of € 1000 determines a reduction of € 8 in the per capita contribution paid to the common budget, while the expenditure side is irresponsive. The analysis also shows that the various corrections mechanisms applied over time to the revenue side of the budget have reduced its redistributive and stabilisation capacity.
Keywords: European Union, Budget, Redistribution, Stabilisation
JEL Classification: E61, E62, H11, H61, H77
Suggested Citation: Suggested Citation