Fiscal Policy and Growth in the Context of European Integration
32 Pages Posted: 2 Feb 2006
Date Written: July 2000
The paper considers the issue of whether a supranational fiscal policy in Europe is needed, and, if so, what responsibilities it should undertake. The literature on endogenous growth and the principle of subsidiarity suggest that such a policy should be limited to externalities or economies of scale not captured at the national level. These may include spending on research and development and transportation or knowledge networks, and harmonization of social security designed to enhance labor mobility. EU-wide stabilization policy or enhanced EU redistribution does not seem justified, however.
Keywords: European Union, fiscal federalism, tax competition, social security
JEL Classification: F22, Hll, R50
Suggested Citation: Suggested Citation