Table Of ContentReport on the State of the
European Union,
Volume 1
Edited by
Jean-Paul Fitoussi and
Fiorella Kostoris Padoa Schioppa
Report on the State of the European Union
Also by Jean-Paul Fitoussi
ECONOMICS IN A CHANGING WORLD
Also by Fiorella Kostoris Padoa Schioppa
THE PRINCIPLE OF MUTUAL RECOGNITION IN THE EUROPEAN INTEGRATION
PROCESS (editor)
Report on the State of the
European Union
Volume 1
Edited by
Jean-Paul Fitoussi
and
Fiorella Kostoris Padoa Schioppa
with contributions from
OFCE team:
Jérôme Creel
Éloi Laurent
Jacques Le Cacheux
ISAE team:
Efisio Espa
Luisa Sciandra
Marco Ventura
Roberto Basile
Sergio De Nardis
Cristina Brandimarte
Enrico D’Elia
Silvia Valli
Carlo Declich
Stefania Gabriele
Paola Tanda
© Jean-Paul Fitoussi and Fiorella Kostoris Padoa Schioppa 2005
Softcover reprint of the hardcover 1st edition 2005 978-1-4039-1711-9
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ISBN 978-1-4039-1712-6 ISBN 978-0-230-00627-0 (eBook)
DOI 10.1057/9780230006270
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Fitoussi, Jean-Paul, 1942–
Report on the state of the European Union/Jean-Paul Fitoussi and
Fiorella Kostoris Padoa Schioppa.
p. cm.
Includes bibliographical references and index.
1. European Union. I. Padoa-Schioppa, Fiorella, 1945– II. Title.
JN30.F58 2005
940.56—dc22 2004057663
10 9 8 7 6 5 4 3 2 1
14 13 12 11 10 09 08 07 06 05
Contents
List of Tables vi
List of Figures viii
List of Boxes x
Preface: Is Europe Debatable? xi
Part I Democracy and Legitimacy
1 Democratic Legitimacy and Political Representation
in the EU Institutions 3
2 Overruled Europa: Market versus Democracy in the EU 31
Part II Convergence and Cohesion
3 The Mirages of Nominal Illusion: Variations on Convergence 59
4 Regional Differentials and Policies for Territorial Cohesion
in the European Union 71
Part III Macroeconomic Policies
5 The Conduct of Macroeconomic Policies in the Euro Area 95
6 The European Policy Mix: Law and Order 139
Part IV Social Integration
7 European Indicators for Social Cohesion: A Step Forward
Along the Lisbon Path 177
8 From Tax Competition to Social Race to the Bottom?
European Models and the Challenge of Mobility 207
Notes 232
Bibliography 247
Index 258
v
List of Tables
1.1 Support for EU membership, 1996–2001 12
1.2 Trust in Parliaments, 1996 and 2001 19
1.3 Trust in EU and in national institutions, 1996 and 2001 20
1.4 Opinions on EU priorities (national data), 1999 and 2001 22
1.5 Competence division between the EU and member
states, 1996 and 2001 23
2.1 Balassa’s typology and European economic integration 35
4.1 Standard deviation of per capita income and
percentage ratio between the average income level
of each area and the centre 76
4.2 Standard deviation of per capita income and
percentage ratio between the average productivity level
of each area and the centre 78
4.3 Standard deviation of employment rate and
percentage ratio between the average employment
rate of each area and the centre 79
5.1 Estimate of the joint effects taking into account
the gap between the ECB provisions and the different
transmission mechanisms of monetary policy measures
in the euro countries 114
5.2 Dynamics of national PPP and minimum inflation in
the EMU 121
5.3 Coefficients of sensitivity and minimal benchmark, 2002 128
5.4 Budget balances and public debt, 2001 130
5.5 Structural budget balances 131
5.6 Output gap (deviation of actual from potential output) 134
6.1 Trade openness rates, 1996 147
6.2 Fed members’ speeches distribution list, January
1997–November 2000 160
6.3 ECB members’ speeches distribution list, June
1998–November 2000 161
6.4 Ranking of events according to their importance to
the markets 162
6.5 Ranking of events according to their impact on market
uncertainty 162
7.1 Examples of best practices in social security and protection 181
vi
List of Tables vii
7.2 Monetary poverty standards adopted in different countries 191
7.3 The performance of social cohesion indicators 197
8.1 The evolution of nominal corporate tax rates, 1990–8 219
8.2 The evolution of basic VAT rates, 1990–8 220
8.3 Dependence ratios for the EU-15 228
List of Figures
1.1 Support for EU membership, 1981–2001 11
1.2 Perception of EU membership benefits of the first
member states 13
1.3 Perception of EU membership benefits, Denmark,
Ireland, UK 14
1.4 Perception of EU membership benefits, Austria, Finland,
Greece, Portugal, Spain, Sweden 15
1.5 Trust in European institutions and bodies 17
1.6 Trust in the European Parliament 17
1.7 Trust of EU countries in the European Parliament 18
1.8 Priority ranking of EU objectives, 1996 and 2001 21
1.9 The ‘Euro-dynamometer’: current and desired velocity
of European integration 25
1.10 Opinions in favour of the Constitution 26
2.1 The euro’s effective exchange rate trends since its
introduction 33
3.1 Analysis of nominal convergence 63
3.2 Standard deviations of annual rates of inflation 64
3.3 The effects of German reunification 65
3.4 The effects of the currency crisis on nominal
interest rates 65
3.5 Standard deviations of regional per capita GDP 68
4.1 EU-12 regions: standard deviation of per capita income,
labour productivity and employment rate 77
4.2 EU-12 regions: variance decomposition of per capita
income 80
4.3 Regional distribution by national/regional contribution
class 83
4.4 Transition probability matrices of per capita income,
productivity and employment rate relative
to EU-12 average 85
5.1 Official ECB rates and theoretical rates 109
5.2 Gap between the variations of adjusted theoretical
interest rates and those of the official ECB rate 112
5.3 Effects of increase of interest rates by one percentage
point on real GDP growth 113
viii
List of Figures ix
5.4 Purchasing power parity (PPP) indices in euro countries 118
5.5 Dispersion between PPP indexes 119
5.6 Price convergence in the euro area 120
6.1 The prisoner’s dilemma: gains matrix 148
6.2 The game of ‘chicken’ gains matrix 148
6.3 Short-run interest rates: the Fed and the ECB 152
6.4 Short-run and long-run nominal interest rates in the
Euro area and the Euro/US$ exchange rate 153
6.5 Inflation and interest rates in the Euro area 154
6.6 Nominal interest rate and economic growth in the
Euro area 155
6.7 Long-term and short-term interest rates: USA and the
Euro area 156
6.8 Interest rates on 10-year government bonds 164
6.9 Stock market prices 164
7.1 Percentages of poverty incidence and intensity rates
(poverty gap) 192
8.1 The virtuous European triangle 211
8.2 European social models and ‘social migration’ 226
