32125 - EU Economics

Learning outcomes

The course introduces the study of the ECONOMICS and POLITICAL ECONOMY of the European Union.  

Some questions are especially relevant to this study. Students should always keep them in mind, as they provide the motivation that underlies all the lectures:

1) EU member countries have given some powers to the EU in many fields, including many aspects of economic policy.

• What motivated these transfers of sovereignty?
  
• Have too many powers or too few been transferred?
• Was it an appropriate choice? Was it inevitable? Could it be better?
• Should we aim to transfer more powers in the future? Alternatively, should we want to hand some powers back to the member states?
  

2) How does the EU exercise these powers?

• Which are the EU objectives and agenda?
• How are the economically relevant decisions taken? Who is accountable for these decisions, and to whom?
• Have powers been appropriately assigned to the different EU institutions? Are these powers well balanced in respect of the tasks assigned to the EU, especially in the economic field?
• Does the EU have appropriate instruments to take and implement its decisions, or not enough, or too many?

3) Which have been the EU main achievements in the economic field so far?

• Have there been only successes? In which fields or actions has the EU achieved success? Where did instead fail, and why?
• Are the economies of the member countries better off because of the EU, or not really?
• Who benefits more, and why? Are there lessons in this for those who benefit less?
• Should entering the EU be a goal for non-member European countries? Should more EU members want to join the euro area? In both cases, under what conditions?

4) More specifically, how have the EU institutions and decisions fared since the crisis of 2008 and the Great Recession?

• Did EU institutions manage well during this crisis?
• Why are the outcomes of the crisis so heavily unbalanced between the member countries? Whose responsibility is that? Which normative lessons can we draw from this?
• The crisis has exposed several institutional and policy weaknesses. Which are these weaknesses? Have they been successfully solved, or is the EU in the process of doing so? How?
• In particular, the crisis seem to have highlighted an “inconsistent triangle”, between stability, austerity, and growth. How can we solve it?

On each of these points, we cannot expect to find a response or a solution that it is easy to share among the interested parties. There are many controversies and debates on each of these issues. 

These debates are important!

I will try to present and motivate alternative opinions, and encourage the students to do the same. It is the purpose of this course to help students to form and motivate opinions in an informed and well-structured way.

In general, when evaluating these debates we should be aware of the political economy of the EU.  In the (real) world of political economy, decisions are often subject to the incompleteness and uncertainty of available information, and actions are shaped by the powerful combinations of the interests and ideas of the relevant actors, under the constraints of available resources and technologies. In this world, there are no benevolent, fully informed planners. It does not help much to consider the EU as if it were governed by such an imaginary ruler. It is not. Our analyses of EU economic decisions and policies will acknowledge that, when they act, EU decision makers have often only an imperfect knowledge of the consequences of their actions, have limited tools, and they frequently interact in non-cooperative ways with decision makers from the member states.

Course contents

Part 1: Micro

1.       What is the EU? Why is it this way?

• Appendix: Attribution of powers
• Appendix: How to obtain economic data and references
• Appendix: How to write a course essay
  

2.       Globalization and Europe's place

3.       Integration as a Process: The Internal Market

• Appendix: What is productivity?

4.       The Budget

5.       Regional Policies and Structural Funds

6.       Cohesion, Social Models and Labor Markets

Part 2: Macro

7.       Macro policies in the EU, EA and the Great Recession

• Appendix: A review of Macro Stabilization Policies

8.       Why a Single Money? MP in the EA up to the Crisis

9.       Decentralized Fiscal Policy

• Appendix: Debt sustainability and fiscal discipline. Bailouts

10.    Convergence and Euro Adoption

11.    Towards the Great Recession: the financial crisis: origins and globalization

12.    Managing the Great Recession: USA and EA compared

13.    The Debate on Austerity. Why do Different Countries Respond so Differently?

14.    Lessons for today

 

Readings/Bibliography

A detailed list of required readings and documents, to be read in addition to the lecture notes, will be given during the first lecture.  All readings are collected in the dedicated website. Please note that they are all in English.

Two very useful textbooks are:

• Baldwin, Richard and Wyplosz, Charles (2015) The Economics of European Integration. McGraw Hill, 5/e.
• De Grauwe, Paul (2014) Economics of Monetary Union. Oxford UP, 10/e.

Teaching methods

Lectures will be supported by PC-based presentations.

Students are advised to download and read these presentations (and possibly the related readings) before lectures.

Emphasis will be placed on the use of Internet sources to access information and policy debates relevant to the course.

Students are encouraged to take an active part in many class discussions.

Assessment methods

Students are strongly advised to attend all lectures.

The final mark is equal to the sum of the points obtained from the following:

• Intermediate written test (prova intermedia, max 10 points)
• Final written test (prova finale, max 12 points)
• Final essay or class presentation (max 11 points)

If points are equal to 31 or more, the final mark is 30 e lode.

Intermediate and Final written tests : short answers (max. 250 words) to 4 open questions (out of 5). Minimum points to be valid: 6. Exams take place at Labic. One exam may be missed exclusively for grave reasons (to be authorized explicitly), in which case it will have to be taken at the next available opportunity.

Final essay: no more than 5000 words long / Class presentation: delivered in 15'-20', with .pptx file of equivalent.

• Essays and presentations may be written in Italian or in English.
• For a class presentation, the topic must be agreed with the instructor well ahead of the delivery (during regular class hours). There is a limit to the number of accepted presentations.
• For an essay, the topic must be agreed with the instructor before the end of the lectures. It must be delivered by e-mail one week before the exam date. It will be discussed during one “appello di esami” in the summer session.

Students who took successfully the intermediate and final written tests, but fail to agree on or to deliver in time the final essay or presentation, may take an additional written test (prova integrativa), which requires answers to 5 out of 6 questions. This test must be taken during the summer session.

Students who did not attend lectures (non frequentanti), or who missed both the intermediate and final written tests, will take a single written test in a regular exam session (prova totale). The test will require short answers (max 250 words) to 13 (out of 15) open questions, set in reference to the texts and documents included in the reading list.

Teaching tools

Lectures are supported by PC-based presentations.

Lecture notes and required readings are available from a dedicated website (under renovation, until Febr. 2016). The Internet address will be communicted at the beginning of the lectures. A password will be required to access the required readings.

Please note that, although lectures will be delivered in Italian, all the written material is in English.

Office hours

See the website of Riccardo Rovelli