Individual contributions and working papers

Directorate-General For Translation European Commission

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Construction of Europe
Financial integration - free movement of capital

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• Publié par: EUROPEAN-COMMISSION
• Nombre de lectures: 12
• Langue: English
• Poids de l'ouvrage: 8 Mo

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COMMISSION OF THE EUROPEAN COMMUNITIES
studies
Report of the study group
on the role of public finance
in European integration
Volume II : Individual contributions
and working papers
ECONOMIC AND FINANCIAL
SERIES - 1977 B13 This report examines a main — but until now largely neglected — aspect of
economic integration, namely the role of public finance. In so doing,
it goes beyond the more familiar terrain of free trade and monetary inte­
gration.
A major part of the work of the Study Group has been a thorough study of
public finance in various federations and unitary states. Financial relation­
ships between levels of government and the economic effects of public
finance on regions within countries merited special attention.
Based on this analysis, the theoretical literature on "fiscal federalism" and
given the political will for further economic integration (falling short,
however, of monetary union), certain changes in Community expen­
ditures and revenues during the "pre-federal integration" phase are sug­
gested, particularly extension of expenditures on structural, cyclical,
employment and regional policies through more participation in regional
policy aid, and in labour market policies, a Community unemployment
fund, a limited budget equalisation scheme, cyclical grants to local or
regional governments and a conjunctural convergence facility. The net cost
of these suggestions would lead to a rise in the Community budget from its
present 0.7 % to around 2-2 \ % of Community GDP.
For more ambitious plans the Community budget would have to be
extended by far more to provide sufficient geographical equalisation of
productivity and living standards together with cushioning of temporary
fluctuations, in the absence of which, monetary union in particular would
be unattainable. COMMISSION OF THE EUROPEAN COMMUNITIES
Report of the study group
on the role of public finance
in European integration
Volume /ƒ : Individual contributions
and working papers
COLLECTION STUDIES
Economic and Financial Series No. B13
Brussels, April 1977 This report has been prepared by a group of independent
experts set up by the Commission. The opinions expressed
in this report remain the sole responsibility of the group
and not that of the Commission and its services.
© Copyright ECSC - EEC - EAEC, Brussels and Luxembourg, 1977
Printed in Belgium
Catalogue number: CB-NI-77-B13-EN-C PREPACE
At the end of 1974 the Commission asked a group of independent
economists (Professors Biehl, Brown, Porte, Préville, O'Donoghue
and Peeters, and Sir Donald MacBougall as Chairman) to examine
the future role of public finance at the Community level in the
general context of European economic integration.
The Study Group held fourteen meetings from April 1975 "to March
1977· Officials of several Directorates-General of the Commission
also took part in these meetings (Economic and Financial Affairs,
Regional Policy, Budget, Financial Institutions and Taxation).
The Group also had the benefit of discussions with two expert con­
sultants from the United States (Professor Oates"! and Australia
(Professor Mathews).
The results of the work are presented in two volumes. The first
volume contains the General Report, including an Introduction
and Summary, all of which have heen unanimously agreed hy the
members of the Study Group.
The General Report draws heavily on the much larger body of evi­
dence and analysis contained in this second volume. It consists
of individual contributions by the members of the Study Group,
and the two expert consultants from the United States and Australia.
It also contains working papers contributed at the request of the
Group by its secretariat of officials from the Directorate-General
for Economic and Financial Affairs of the Commission. While the
authors of the individual chapters in the second volume take final
responsibility for them, they have all benefitted from detailed
discussion by the Group as a whole. COMPOSITION OF THE GROUP
Members :
Sir Donald MacDougall Chief Economic Adviser of the Confederation
of British Industry, London (Chairman)
Dieter Biehl Professor at the Technische Universität,
Berlin
Arthur Brownr at the University of Leeds, Leeds
Francesco Forter at they of Turin, Turin
Yves Fréville Professor at the University of Rennes, Rennes
Martin O'Donoghuer at Trinity College, Dublin
Theo Peetersr at the University of Louvain
The following also participated :
Russell Mathews Professor at the Australian National
University, Canberra
Wallace Oatesr at Princeton University, Princeton
Secretariat from the Directorate-General for Economic and Financial
Affairs :
Paul Van den Bempt Director
Michael Emerson Head of Division
Klaus Schneider
Horst Reichenbach
Jim McKenna
Tom Scott (until mid 1976) CONTENTS
A. STUDIES ON THE INTER-REGIONAL ASPECTS OF PUBLIC FINANCE IN EXISTING 9
FEDERAL AND UNITARY STATES
Chapter Author (l) Title
1 A.J. Brown United Kingdom 11
2 France (*) Y. Fréville 29
D. Biehl Germany 3 65
4 F. Forte Italy 101
5 working paper The overall redistributive effect 119
of public finances in seven inte­
grated economies
6 working paper Budget equalisation through general 145
purpose grants in federations
working paper 7 Specific purpose grants in four 185
f e de rat ions
8 working paper Régionalisation of federal or central 227
government expenditure in seven inte­
grated economies
working paper Régionalisation of federal or central 9 247
tax burden in seven countries
B. STUDIES ON THE PERSPECTIVES FOR THE PUBLIC FINANCE FUNCTIONS OF THE 277
COMMUNITY
10 W. Oates Fiscal federalism in theory and prac- 279
tice: applications to the European
Community
Principles for the assignment of 319 11 F. Forte
public economic functions in a setting
of multi-layer government
12 working paper Perspectives for the place of the 357
European Community in the sectoral
economic functions of government
(1) Working papers were contributed at the request of the Group by its
secretariat of officials from the Directorate-General for Economic
and Financial Affairs of the Commission.
(2) Original language French (other chapters were drafted originally
in English). Chapter Author Title Pare
13 R. Mathews Mechanisms for fiscal equalisation in 399
an integrating European Community
14 working paper Simulations of financial redistribu­ 431
tion in the European Community
15 Th. Peeters Fiscal stabilisation policy in the 461
Community and monetary and exchange
rate policies
16 The assignment of tax resources working paper
between levels of government : the
479
experience of five federations, and
perspectives for the Community's
resources
Budgetary powers of the European 17 M. O'Donoghue
Parliament
505