82005 - Economics of the EU

Learning outcomes

The course is an introduction to the ECONOMICS and POLITICAL ECONOMY of the European Union. Special importance is given to the economic, political and institutional prerequisites of EU integration and enlargement – and to the consequences that integration and enlargement have on member states. Hence, students will become familiar with concepts and models of economics and political economy that are especially useful for understanding and evaluating these processes and the policies that accompany them. One third of the course is dedicated to the institutional and policies innovations adopted since 2008, during the Great Recession.

Course contents

1. Introduction and Overview (1 lecture)
2. What is the EU? Outcomes and Challenges. A survey (3 lectures)
   • Facts and debates on European integration

   2.1 The EU project part 1: From the Customs Union to the Internal Market

   • Institutions, Competences, Powers
   • The challenge of growth: Why was convergence cut short?
   • Resuming growth and convergence: What should the EU do?
   • Enlargement: Deepening vs. widening

   2.2 The EU project part 2: Monetary Union

   • New ambitions: Institutions and goals
   • Convergence criteria vs. Real divergences
   • Great Recession and Austerity

   2.3 – The EU project part 3: Facing the challenges

   • Euro crisis and Institutional Adaptations
   • Brexit and beyond.
3. The Internal Market & Strategies for Growth (2 lectures)
   • Integration as a Process
   • Steps, Policies and Tools
   • Service and Factor Markets
   • Financial Markets
   • Obstacles to completion. The Future of the IM.
4. Complementing the IM (4 lectures)
   • The EU budget
   • Regional Policies and Structural Funds
   • Social Models and Labor Markets
   • Trade policy.
5. EMU: Set up and the first years (6 lectures)
   • Why a MU?
   • Objectives and debates. Derogation and Opting out.
   • Steps towards EMU
   • Convergence criteria. Critiques
   • The Single Monetary Policy
   • Fiscal policies in the MU: the SGP and its reforms
   • Fiscal discipline and the (un)sustainability of government debts
   • The seeds of crisis: Real divergences and the loss of the external constraint.
6. The Great Recession, Euro Crisis and Institutional Adaptation (4 lectures)
   • The financial crisis
   • GR and Policy responses: USA and EA compared
   • Policy responses: Innovations in the single MP from 2008 to 2017
   • Policy responses: Bailouts and the new institutional framework
   • Why so bad for the periphery? Debates on Austerity and Convergence
   • Proposals for Reform. Back to the Future?

Readings/Bibliography

Lecture notes and other required readings and documents are collected in the dedicated Dropbox directory.

Two extremely useful textbooks are:

• Baldwin, Richard and Wyplosz, Charles (2015) The Economics of European Integration. McGraw Hill, 5/e.
• De Grauwe, Paul (2016) Economics of Monetary Union. Oxford UP, 11/e.

Teaching methods

Lectures are supported by electronic slides.

Slides and lecture notes are available for downloading.

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

Students are also encouraged to use Internet sources to access information, find research papers and document policy debates relevant to the issues covered by the course. They are also encouraged to take an active part in class discussions.

Assessment methods

All students are required to pass a Fitness Test (no marks). Students attending classes are required to pass two written tests and to deliver an essay or presentation. Students not attending will take a single, longer written test.

To benefit from the interactive structure of the course, students are strongly advised to attend all lectures.

FITNESS TEST ("Idoneità")

All students must pass a fitness test, under the guidance of the instructor. The test (which does not contribute to the final marks) requires to:

a) download quantitative data from a reputable source (Eurostat, ECB, OECD, IMF, National Statistical Services or Central Bank, etc...);

b) perform simple operations on those data in an Excel file;

c) prepare a "user friendly" table and graph to summarize the main characteristics of the data examined;

d) write a short comment (250 words) describing the main stylized facts that can be observed by the data.

The fitness test can be done at any time (at home) before the intermediate written test (see below).

Students not attending classes will be required to do the fitness test in class, on the day of the written examination.(Approximate time required: 30 minutes).

FOR STUDENTS ATTENDING CLASS ("Studenti frequentanti"),

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

• Intermediate written test (prova intermedia - max 11 points)
• Final written test (prova finale - max 11 points)
• Final essay or class presentation (max 11 points).

If points are equal to 31 or more, the final mark is 30 cum laude.

Intermediate and Final written tests:

• Short answers (max. 250 words) to 4 open questions (out of 5).
• Each answer is valued up to 2,75 points.
• 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 (= max 10 pages with font calibri 12, single spaced)

• Essays and presentations are written in English.
• Topics will be chosen under the guidance of the course instructor.
• Essays must be delivered by e-mail with a .pdf file, before the first “appello d’esami” in June.

Class presentation: delivered in max 20', with .pptx file of equivalent.

• The topic must be agreed with the instructor by April 30.
• Presentations will take place in the final week of lectures. Files must be delivered one day before.
• There may be a limit to the number of accepted presentations.

Students who do not deliver in time the final essay or presentation will take an additional written exam requiring answers to 4 out of 5 questions. This additional exam will have to be taken in the first “appello d’esami” in June.

STUDENTS NOT ATTENDING CLASS ("Studenti non frequentanti"), or those who missed the intermediate and/or final written exams, will take a single written exam in any regular exam session (prova totale).

• The exam will require short answers (max 250 words) to 12 (out of 15) open questions, set in reference to the texts and documents included in the reading list.

Teaching tools

Detailed lecture notes cover the whole outline of the course. They will be available on a Dropbox directory that will be shared with students (A link will be given during the first class).

Lecture notes will provide the basis for class presentations and discussions.

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

Office hours

See the website of Riccardo Rovelli