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Subsidiarity and the European Union

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  • Robert P. Inman
  • Daniel L. Rubinfeld

Abstract

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.

Suggested Citation

  • Robert P. Inman & Daniel L. Rubinfeld, 1998. "Subsidiarity and the European Union," NBER Working Papers 6556, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6556
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    3. Willem H. Buiter, 1999. "Alice in Euroland," Journal of Common Market Studies, Wiley Blackwell, vol. 37(2), pages 181-209, June.
    4. Edward M. Gramlich & Paul R. Wood, "undated". "Fiscal Federalism and European Integration: Implications for Fiscal and Monetary Policies," International Finance Discussion Papers 0694, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    5. Molero, Juan Carlos, 2001. "Analysis Of The Decentralization Of Public Spending In Spain," MPRA Paper 8056, University Library of Munich, Germany.
    6. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2001. "Institutional Rules for Federations," Harvard Institute of Economic Research Working Papers 1940, Harvard - Institute of Economic Research.
    7. Marco Lossani & Piergiovanna Natale & Patrizio Tirelli, 1999. "Disegno delle istituzioni e stabilità finanziaria nell'Unione Monetaria Europea," Economia politica, Società editrice il Mulino, issue 2, pages 243-270.
    8. Floriana Cerniglia & Laura Pagani, 2007. "The allocation of competences between the European Union and the Member States: an analysis of the determinants of Europeans’ preferences," Working Papers 118, University of Milano-Bicocca, Department of Economics, revised 2007.
    9. Rahel Falk & Werner Hölzl & Hannes Leo, 2008. "On the Roles and Rationales of European STI-Policies," Springer Books, in: George Gelauff & Isabel Grilo & Arjan Lejour (ed.), Subsidiarity and Economic Reform in Europe, chapter 8, pages 129-142, Springer.
    10. Floriana Cerniglia & Laura Pagani, 2007. "The European Union and the Member States: Which Level of Government Should Do what? An Empirical Analysis of Europeans’ Preferences," CESifo Working Paper Series 2067, CESifo.
    11. Carbonara Emanuela & Luppi Barbara & Parisi Francesco, 2009. "Self-Defeating Subsidiarity," Review of Law & Economics, De Gruyter, vol. 5(1), pages 741-783, December.
    12. SALMON, Pierre, 2002. "Accounting for centralisation in the European Union : Niskanen, Monnet or Thatcher?," LATEC - Document de travail - Economie (1991-2003) 2002-05, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    13. Oliver Koppel, 2005. "Reviewing Oates' insights in a repeated game setting," Economics of Governance, Springer, vol. 6(3), pages 229-243, November.
    14. Sylvia Beatriz Guillermo Peon & Israel Vargas Casimiro, 2017. "Recaudacion potencial, eficiencia recaudatoria y transferencias federales: Un analisis para las entidades federativas en Mexico utilizando el modelo de frontera estocastica," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 14(1), pages 35-71, Enero-Jun.
    15. Maria Balaguer-Coll & Diego Prior & Emili Tortosa-Ausina, 2010. "Decentralization and efficiency of local government," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(3), pages 571-601, December.
    16. Werner Hölzl, 2006. "Cohesion and Excellence. Two ways to a better Europe?," WIFO Studies, WIFO, number 28810.
    17. Bordignon, Massimo & Brusco, Sandro, 2006. "On enhanced cooperation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2063-2090, November.
    18. Szalai, Ákos, 2002. "Fiskális föderalizmus. Áttekintés [Fiscal federalism. A review]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 424-440.
    19. McCahery, J.A. & Vermeulen, E.P.M., 2005. "Does the European company prevent the 'Delaware-effect'?," Discussion Paper 2005, Tilburg University, Tilburg Law and Economic Center.
    20. Berthold, Norbert & Fricke, Holger, 2009. "Die Bundesländer im Standortwettbewerb," Discussion Paper Series 106, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    21. Rezessy, Silvia & Dimitrov, Konstantin & Urge-Vorsatz, Diana & Baruch, Seth, 2006. "Municipalities and energy efficiency in countries in transition: Review of factors that determine municipal involvement in the markets for energy services and energy efficient equipment, or how to aug," Energy Policy, Elsevier, vol. 34(2), pages 223-237, January.

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    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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