economics of european integration - stephen kinsella
TRANSCRIPT
Economics of European IntegrationEC4333, Lecture 1
Dr Stephen Kinsella
Department of Economics, KBS, University of [email protected], www.stephenkinsella.net
September 8, 2009
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 1 / 18
Today
1 Module Outline, Grading, & expectations
2 Outline of lectures
3 Defining Integration
4 Scope of the module
5 Some Facts about the EU
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 2 / 18
Learning Outcomes
conversant with the historical literature on the development of the EUhaving written several thousand words on the subject;
understand transaction-cost analysis, institutional analysis, optimalcurrency area theory and simple models of capital and labour marketintegration and be able to apply these theories to current practicefollowing the problem sets given in class;
conversant with the Solow model of economic growth, theory andpractice of covergence, and able to assess the empirical reality ofthese claims;
knowledgeable about EU social and environmental policy and theirimpact on the Irish economy.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 3 / 18
Learning Outcomes
conversant with the historical literature on the development of the EUhaving written several thousand words on the subject;
understand transaction-cost analysis, institutional analysis, optimalcurrency area theory and simple models of capital and labour marketintegration and be able to apply these theories to current practicefollowing the problem sets given in class;
conversant with the Solow model of economic growth, theory andpractice of covergence, and able to assess the empirical reality ofthese claims;
knowledgeable about EU social and environmental policy and theirimpact on the Irish economy.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 3 / 18
Learning Outcomes
conversant with the historical literature on the development of the EUhaving written several thousand words on the subject;
understand transaction-cost analysis, institutional analysis, optimalcurrency area theory and simple models of capital and labour marketintegration and be able to apply these theories to current practicefollowing the problem sets given in class;
conversant with the Solow model of economic growth, theory andpractice of covergence, and able to assess the empirical reality ofthese claims;
knowledgeable about EU social and environmental policy and theirimpact on the Irish economy.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 3 / 18
Learning Outcomes
conversant with the historical literature on the development of the EUhaving written several thousand words on the subject;
understand transaction-cost analysis, institutional analysis, optimalcurrency area theory and simple models of capital and labour marketintegration and be able to apply these theories to current practicefollowing the problem sets given in class;
conversant with the Solow model of economic growth, theory andpractice of covergence, and able to assess the empirical reality ofthese claims;
knowledgeable about EU social and environmental policy and theirimpact on the Irish economy.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 3 / 18
Grading
Final exam, 50%. 2 Sections. 10 short qs, then 3 from 4 longerquestions. Sample exam week 8.
2 Problem Sets, 15% each
1 Essay, 20%
Essay
Briefly discuss the development of the European Union through the treatystructure. Discuss the potential costs and benefits of the Lisbon Treaty’sratification for the Irish economy.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 4 / 18
Policies/Expectations
Lecture slides/podcasts/handouts up after lecture
Notes given out at end of class
Fast email turnaround, normally less than 1 day. Email to:[email protected].
If no reply, email again. Prob. Spam.
On pain of spiky, scary death, do not send me text messages asemails. I will cut your ears off, rub the stumps in salt, and playMoby into them.
Come see me whenever, email for a time. No office hours. Office isKB3-42/
Written feedback on all submitted work
Any questions in class, just ask.
Discussion is preferable to lecturing
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 5 / 18
Outline
1 History, Structure, Institutions
2 OCA/EMU Theory
3 Size & Scale Effects, growth & development
4 Macroeconomics, economic inequality in the EU
5 Location effects, international trade, Ireland and the EU.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 6 / 18
Outline
1 History, Structure, Institutions
2 OCA/EMU Theory
3 Size & Scale Effects, growth & development
4 Macroeconomics, economic inequality in the EU
5 Location effects, international trade, Ireland and the EU.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 6 / 18
Outline
1 History, Structure, Institutions
2 OCA/EMU Theory
3 Size & Scale Effects, growth & development
4 Macroeconomics, economic inequality in the EU
5 Location effects, international trade, Ireland and the EU.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 6 / 18
Outline
1 History, Structure, Institutions
2 OCA/EMU Theory
3 Size & Scale Effects, growth & development
4 Macroeconomics, economic inequality in the EU
5 Location effects, international trade, Ireland and the EU.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 6 / 18
Defining Integration
Debate runs like this
Trade liberalisation vs economic integration–Goes further–Discriminatory
Trade arrangements can differ”
1 Barriers to trade in goods
2 Barriers to services trade
3 Barriers to trade in productive factors
4 Corporate behaviour
5 Government behaviour
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 7 / 18
Defining Integration
Debate runs like this
Trade liberalisation vs economic integration–Goes further–Discriminatory
Trade arrangements can differ”
1 Barriers to trade in goods
2 Barriers to services trade
3 Barriers to trade in productive factors
4 Corporate behaviour
5 Government behaviour
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 7 / 18
Defining Integration
Debate runs like this
Trade liberalisation vs economic integration–Goes further–Discriminatory
Trade arrangements can differ”
1 Barriers to trade in goods
2 Barriers to services trade
3 Barriers to trade in productive factors
4 Corporate behaviour
5 Government behaviour
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 7 / 18
Defining Integration
Debate runs like this
Trade liberalisation vs economic integration–Goes further–Discriminatory
Trade arrangements can differ”
1 Barriers to trade in goods
2 Barriers to services trade
3 Barriers to trade in productive factors
4 Corporate behaviour
5 Government behaviour
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 7 / 18
EU: Economic solution to a political problemHow can Europe avoid another war?
Country Death Toll Economic Setback to Year’s GDP
Austria 525,000 1886Belgium 82,750 1924Denmark 4,250 1936Finland 79,000 1938France 505,750 1891Germany 6,363,000 1908Italy 355,500 1909Netherlands 250000 1912Norway 10,250 1939-45Sweden 0 1939-45UK 325,000 1939-45
Source: Crafts and Toniolo: Economic Growth in Europe since 1945(Cambridge: CUP,1996, p. 4)
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 8 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Causes of the Second World WarThree answers:
Germany
capitalism
destructive nationalism.
3 post-war solutions:
‘neuter’ Germany via Morgenthau Plan, 1944
adopt communism
pursue European integration.
European integration ultimately prevailed, but this was far from clearin the late 1940s.
Depended on causes. Three schools of thought:
The problem/The solution
The loser (Germany) / De-industrialisation
Capitalism / Communism
Integration. Cold war pushed US, UK, France towards strongGermany and integration
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 9 / 18
Steps taken to EU-handout
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 10 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition
1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition
1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid
2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour
3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Big IdeasSee Treaty of Rome, 1957, www.ena.lu/
Free trade in goods
Common Trade policies (Lisbon)
Help ensure undistorted competition1 Prohibit State Aid2 Prosecute Anti Competitive Behaviour3 Reduce distortionary taxes (Irish Corporation Tax)
Allow trading in services
Labour/Capital market integration
Exchange rate coordination
Common social, regional, agricultural, eventually taxation approaches
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 11 / 18
Structures to house these ideasUnderneath the banner of the EU sit:
Competencies vs supranationality
European Commmunity
Common foreign/security policy (Lisbon)
Justice, Home affairs
All underpinned by treaty law.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 12 / 18
Structures to house these ideasUnderneath the banner of the EU sit:
Competencies vs supranationality
European Commmunity
Common foreign/security policy (Lisbon)
Justice, Home affairs
All underpinned by treaty law.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 12 / 18
Structures to house these ideasUnderneath the banner of the EU sit:
Competencies vs supranationality
European Commmunity
Common foreign/security policy (Lisbon)
Justice, Home affairs
All underpinned by treaty law.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 12 / 18
Structures to house these ideasUnderneath the banner of the EU sit:
Competencies vs supranationality
European Commmunity
Common foreign/security policy (Lisbon)
Justice, Home affairs
All underpinned by treaty law.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 12 / 18
Budget
Figure: Evolution of EU Budget.Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 13 / 18
Population
Figure: PopulationDr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 14 / 18
Net Contribution by member
Figure: Net Contributions by MemberDr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 15 / 18
An index of Integration
Figure: Index of Economic Integration.Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 16 / 18
Next Time:
Institutions of Economic and Monetary Union, development of currentpolicies and prospects for the future. Models of Customs Unions forProduct and Factor Markets and empirical results on levels of integrationacross these markets Readings:
Baldwin & Wyplosz, Chapters 1 and 2 and 3.
Eichengreen, B. The European Economy since 1945, MIT Press, 2007.
* Beach, D., The Dynamics of European Integration, pgs. 1–31, andpgs. 214–244, 337.142 BEA.
El-Agraa, A.M., The European Union: Economics and Policies, 6thed., pgs 1-19 and 72-79, 337.142 AGR.
McDonald, F. and Dearden, S. European Economic Integration, 3rded., pgs 34-53, 337.142 MCD.
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 17 / 18
References
Dr Stephen Kinsella (University of Limerick) EC4333, Economics of EU Integration September 8, 2009 18 / 18