Kiel Working Papers, Kiel Institute for World Economics
No 1125:
Towards a European Constitution: Fiscal Federalism and the Allocation of Economic Competences
Jürgen Stehn
Abstract: The paper analyzes one important aspect of the
constitutional debate: the allocation of econornie competences between the
EU and the mernber states. It takes the theory of fiscal federalism as a
starting point for an optimal allocation of economic competences. The main
message of the theory is that a transfer of econornie competences from a
lower to a higher political level always leads to a negligence of
individual preferences and, therefore, can only be economically justified
if national policies cause strong spillovers (externalities) to other
jurisdictions. Based on this approach, the paper proposes an allocation of
econornic conipetences that can serve as an overall. guideline for a
European constitution.
Keywords: European constitution; fiscal federalism; allocation of competences; (follow links to similar papers)
JEL-Codes: F15; F42; H11; H23; H77; (follow links to similar papers)
28 pages, August 2002
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