Financing EU Public Goods: Vertical Coherence between EU and National Budgets

29 Pages Posted: 9 Sep 2020

See all articles by Pasquale D’Apice

Pasquale D’Apice

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Paolo Pasimeni

European Commission; IES-VUB

Date Written: July 2020

Abstract

The combination of the challenges emerging from the 2020 pandemic outbreak, amid an unprecedented macroeconomic context, and a limited EU budget, inevitably call for reflections about synergies, or ‘vertical coherence’, between EU and national budgets. The proposals for a larger EU budget, the target of carbon neutrality by 2050, the temporary relaxation of rules for fiscal policy and state aid, would all require greater coordination across government layers. Within this context, this paper studies structural co-movements between EU and national spending over the past two decades, trends that deserve a longer-term assessment, beyond the current response to the pandemic. It finds some synergies, often of a positive sign (leverage rather than substitution), but always very small in magnitude. In light of those results, the paper proposes an “EU public goods rule” for the financing of EU policies, within a commonly agreed and policy-consistent framework.

Keywords: European Union, Fiscal Rules, Public Goods, Budget

JEL Classification: E61; E62; H41; H5; H61

Suggested Citation

D’Apice, Pasquale and Pasimeni, Paolo, Financing EU Public Goods: Vertical Coherence between EU and National Budgets (July 2020). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2020/47, Available at SSRN: https://ssrn.com/abstract=3688320 or http://dx.doi.org/10.2139/ssrn.3688320

Pasquale D’Apice (Contact Author)

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

Paolo Pasimeni

European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

IES-VUB ( email )

Pleinlaan, 5
Brussels, 1050
Belgium

HOME PAGE: http://https://www.ies.be/users/paolo-pasimeni

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