## Fiscal Policy and Growth in the Context of European Integration

_IMF Working Papers, July 1, 2000_

## Source details

**Canonical URL:** [Fiscal Policy and Growth in the Context of European Integration](https://www.imf.org/en/publications/wp/issues/2016/12/30/fiscal-policy-and-growth-in-the-context-of-european-integration-3700)

## Other formats

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## Bibliographic details
- Authors: Paul R Masson
- Published: July 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855487.001

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### Summary
- The paper considers whether a supranational fiscal policy in Europe is needed, and, if so, what responsibilities it should undertake.
- The literature on endogenous growth and the principle of subsidiarity suggest limits on supranational fiscal responsibilities to externalities or economies of scale not captured at the national level.
- Potential supranational spending areas identified include research and development, transportation or knowledge networks, and harmonization of social security designed to enhance labor mobility.
- The paper finds that EU-wide stabilization policy or enhanced EU redistribution does not seem justified.

### Key Findings
- Supranational fiscal policy should be limited to addressing externalities or economies of scale not internalized by national fiscal policies.
- Spending areas appropriate for EU-level involvement:
  - Research and development
  - Transportation networks
  - Knowledge networks
  - Harmonization of social security to enhance labor mobility
- EU-wide stabilization policy is not supported by the analysis.
- Enhanced EU redistribution is not supported by the analysis.

### Policy Recommendations
- Restrict supranational fiscal action to activities with clear cross-border externalities or economies of scale.
- Prioritize EU-level spending on infrastructure and knowledge public goods (research and development; transportation; knowledge networks).
- Pursue harmonization of social security provisions to facilitate labor mobility across EU countries.
- Avoid establishing EU-wide stabilization mechanisms or expanding EU redistribution based on the arguments in the paper.

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## Content in this bundle

- **Fiscal Policy and Growth in the Context of European Integration - WP/00/133**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/fiscal-policy-and-growth-in-the-context-of-european-integration-3700_