RICERCA ITALIANA     

Fiscal and Regulatory Challenges of the European Integration: an Agenda 2007-2013

Università degli Studi di Milano

Abstract

The research project aims at contributing to the policy analysis and debate of the next programming period of the European Union intervention of 2007-2013, with particular attention to the public finance dimension.In this period European Union will have to face three important challenges.

First of all, considering the debate on the growth differential in comparison with the United States, the objective is to understand how the revision in progress of the fiscal policy architecture could contribute in creating the conditions for public intervention to help achieving the Lisbon goals. This not only entails a second thought of the fiscal coordination mechanism (with particular reference to the expenditure mechanisms), but also of the taxation tools.

Secondly, the community budget, notwithstanding the limited relative dimensions (presumably not much over 1% in the period) could allow a leverage and coordination effect with national balances: this issue, that is among other things linked to the matter of own revenues, is strictly linked to the subject of the assignment of powers in various matters.On this issues the ongoing debate on the EU Constitution highlights that, even though the treaty will be approved, it will not suffice to solve all the problems emerged in recent years and amplified by the enlargement.

Finally, the third considerable issue that the European institutions and national governments will need to face concerns the >>>

Principal Investigator

Massimo FLORIO Università degli Studi di MILANO

Research Objectives

The European Union, in the period 2007-2013, will face a multiplicity of challenges that interests primarily the public finance administration, the design of appropriate tools to enhace the competitiveness at the international level, the complete implementation of a European citizenship model. Interpreting and accepting these challenges is of crucial importance to understand the directions of development of the European system and to propose alternatives, in particular in a context of strong dynamism partly due to the recent EU enlargment. This research program aims - with a mainly public economics and public finance view - to understand the criticalities of the European system recommending alternative solutions about the tax structure, the management and development of the EU revenues and expenditures and the organization of the main services general economic interest.

A first objective of the research programme concerns the discussion of the debate on the European decline with respect to the most dynamic areas of the world. We will try to identify the reasons of the increased differential between the European and the US development, considering the evolution of productivity of different factors, the specificities of the different member states, the peculiarities of the EU area with regard to the preferences between leisure and work, the development and impact of ITC and the constraints imposed to the tax policy for re-launching the economy. The possible >>>

Timescale

24 months

National and international background

The enlargement of the European Union poses a set of questions, which the scientific community has started to address in recent years. A first debate has been focussing on the financial perspectives of the EU and on the decline of the EU with respect to the most dynamic areas of the world (see, among others, the recent contribution of Gros-Micossi, 2005; Salvemini, 2003 and Biasco, 2003).

The starting point is represented by the fact that today the European per capita income is equal to only 70% of the US one. This figure has been evaluated from two different viewpoints: on one side, many economists – for instance, the authors of the Sapir Report (2003) – deem that this is the expected outcome of the productivity gap emerged vis-à-vis the United States in the last decade; on the other side, Blanchard (2004) explains that the lower level of the European per capita income towards the American one is not linked to a productivity gap, but to a lower number of working hours, hence to a different system of preferences (the Europeans would prefer exploiting the increase in productivity to favour an increase in the amount of leisure, and not of output). This analysis has been extended in two directions. According to the first, changes of per capita income have been splitted between changes of the employment rate and hourly productivity, and this in its turn has been imputed to either changes in output for each hour worked or number of working hours for employee. The >>>