[print_link]

EC4333, Economics of European Integration

Module Outline, Autumn 2008

Lecturer Dr. Stephen Kinsella

stephen.kinsella@ul.ie, office hours by appointment only.

TA Neal Kilbane

neal.kilbane@ul.ie, office hours TBA.

Prerequisites EC4001, EC4002, or permission of the instructor.

ECTS Credits: 6

Introduction The years since 1945 have been the longest period since 113 B.C. in which no army has crossed the Rhine with war-like intentions. The very idea of war between the European Union’s member States seems so remote as to be nonsensical. The creation of the European Union (EU); a legal, political, economic, cultural, and soon to be military entity, is one of the greatest economic experiments in the history of Mankind. The shape and scope of the EU has the capacity to affect the lives of hundreds of millions of people in different ways, some positive, some negative. Thus a careful study of this experiment is in order.

This module is about using economics to understand the history of the EU, its significance in terms of the post 1945 World Economy, its development up to today, and the prospects for change most likely in the future. We have 24 contact hours. Each 2 hour block will be thematic, that is to say, this is not a survey module in International Economics or naive Trade theory. Rather, this module will focus on developing the appropriate models and conceptual frameworks to understand a particular issue facing the EU today. The objective of the module is to inform potential future policy makers of the issues at stake and equip them with the tools to analyze these issues.

Learning Outcomes By the end of this module, students should be

1. conversant with the historical literature on the development of the EU having written several thousand words on the subject;

2. understand transaction-cost analysis, institutional analysis, optimal currency area theory and simple models of capital and labour market integration and be able to apply these theories to current practice following the problem sets given in class;

3. conversant with the Solow model of economic growth, theory and practice of covergence, and able to assess the empirical reality of these claims;

4. knowledgeable about EU social and environmental policy and their impact on the Irish economy.

Click below to read the details of this module.

Assessment To get a grade for this class students will have to sit a final exam worth 50% of their final grade, two problem sets worth 15% each, beginning in week 5, and an essay worth 20%, due by week 5. Past exams are here and here. The exam is an essential part of the assessment, and each part of the module assessment must be passed to pass the module outright.

With respect to the repeats, a student would normally carry the module work marks to be incorporated into the overall repeat exam grade.

Problem sets will be distributed in class and discussed with the TA, with each due the next class each week.

The essay title is the following:

Briefly outline the development of the European Union from the end of World War II to the present day. Based your assessment of the development of the EU to the present day, was the Irish ‘no’ vote for the Lisbon treaty correct? Justify your answer using primarily economic arguments.

Essays should be no longer than 10 A4 pages, typeset in Times New Roman font, size 11, double spaced. A title page is required, and this should include the title of the essay, your name, your student number, and a word count. Neither the title page nor the reference list are not part of the page count. Ensure you reference all articles and data used in an appropriate and academic fashion. The essay will be due the Monday of the fifth week of term. All essays must be submitted in hardcopy to the departmental office, KB3-18, and by email to stephen.kinsella@ul.ie with the student’s name, student number and the module code as the filename. So, for example, the file will be called 0123456_Kinsella_Stephen_EC4333_Essay.doc.

Plagiarism will not be tolerated. Students should refer to the University’s policy on plagiarism in their Student handbooks, and for referencing help, go here. The essays will be graded according to the schema available on http://www.stephenkinsella.net/ec4333. Written feedback will be given on all essays.

Detailed Module Outline There is no one textbook for the course. Readings are taken from many textbooks, and all are on reserve in the library. Readings which are not part of textbooks are available online as a coursepack at http://www.stephenkinsella.net. Course notes, slides, links to datasets, and a podcast of the lecture will be available from the course site after each lecture. Attendance at lectures is mandatory.

The lectures are not designed to fit into 2 hour slots: some will be longer—-like the economics of Monetary Union—- and some will be shorter. All readings available in the library have their codes given in bold font to speed you in finding them. Readings marked with a * are the essential readings for the next lecture, so if you read only one thing that week, the starred reading should be it. Most readings here are hyperlinked, which is why this module outline is online.

Lecture 1. Introduction to the course, definition of `economic integration’, history of the institutions of the European Union to date. The European economy since 1945.

Readings:

1. Beach, D., The Dynamics of European Integration, pgs. 1--31, and pgs. 214--244, 337.142 BEA.
2. *Eichengreen, B. The European Economy since 1945, Princeton University Press, 2007, Chapters 2 and 3.
3. O'Grada, C. A Rocky Road: The Irish Economy since 1920. Manchester University Press, 1997.
4. El-Agraa, A.M., The European Union: Economics and Policies 6th ed., pgs 1-19 and 72-79, 337.142 AGR.

Lecture 2. History of the EU continued. The Lisbon treaty, what went wrong?

Readings:

1. Sara Hageman, Lisbon Treaty: Democracy vs. Efficiency? Vox EU,21 June 2008
2. Kevin O Rourke, Why the Irish Said No: Thoughts on a second referendum Vox EU 26 June 2008
3. Daniel Gros, The Irish 'No': Plan B. Vox EU 16 June 2008
4. European Union, 2007. The Lisbon Treaty.

Lecture 3. Economic and Monetary Union, EMU. Optimal Currency area theory & tariff analysis.

Readings:

1. * Pelkmans, J. European Integration: Methods and Economic Analysis 1st ed., pgs. 83--104 and 133--155. 337.142 PEL.
2. El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs. 149--164, 337.142 AGR.
3. Lane, P. (2006) The Real Effects of EMU, Journal of Economic Perspectives.

Lecture 4. Effects of EMU. Growth, convergence, and integration in the new EU.

Readings:

1. * Buiter, W.H. “The Economic Case for Monetary Union in the European Union”, Review of International Economics, Vol. 5, Issue s, pgs 10-35.
2. Wyplosz, C. `European Monetary Union: The Dark Sides of a Major Success’, Economic Policy, 2006. (Be on UL campus to download this)
3. Lane, P. EMU and Financial Market Integration, IIIS Discussion Paper 248, May 2008

Lecture 5. Growth within the EU over time.

Readings:

1. * Crafts, N. Recent European Economic Growth: Why can’t it be Like the Golden Age? National Institute Economic Review 2007; 199; 69 (69-a.pdf
2. * Mcquinn, Kieran & Whelan, Karl, 2006. “Prospects for Growth in the Euro Area,” MPRA Paper 5893, University Library of Munich, Germany.
3. K. Whelan and K. Quinn, Conditional Convergence and the Dynamics of the Capital-Output Ratio Journal of Economic Growth, June 2007

Lecture 6. Political Integration in the EU.

Readings

1. * Alesina, A. “Conflict, Defense Spending and the Number of Nations,” European Economic Review, January 2006, 50: 91-120 (with Enrico Spolaore).
2. Alesina, A “Fairness and Redistribution: US vs. Europe,” American Economic Review, September 2005, 95: 913-35 (with George-Marios Angeletos).
3. Alesina, A “What Does the European Union Do?” Public Choice, June 2005, 123: 275-319 (with Ignazio Angeloni and Ludger Shuknecht).

Lecture 7. The Common Agricultural and Fisheries Policies, history, theory, and analysis.

Readings:

1. * El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs. 232—261, 337.142 AGR.
2. * S Weyerbrock, Reform of the EU CAP: How to achieve GATT Compatibility? European Economic Review, 42(1), 1998, 375—411. Download: Weyebrockarticle.pdf
3. King, David, Hubbard, Lionel James and Borrell, Brent,Global Economic Effects of the EU Common Agricultural Policy. Economic Affairs, Vol. 20, Issue 2, June 2000. (Be on campus to download this article)
4. Pelkmans, J. European Integration: Methods and Economic Analysis 1st ed., pgs. 164—182. 337.142 PEL.

Lecture 8 Unemployment and Economic Inequality across the EU.

Readings:

1. Puga, D and Henry Overman. ‘Unemployment clusters across Europe’s regions and countries’. Economic Policy 34, April 2002: 115-147
2. Bertola, G. `Europe’s Unemployment Problems’, in Artis and Nixson, eds. The Economics of the Europen Union, 3rd ed., pgs. 353—381.
3. Tito Boeri, The paradox of disappearing European unemployment, Vox Eu, 23 April 2008
4. Blanchard, O. Explaining EU Unemployment, MIT Mimeo, 2004

Lecture 9. EU Enlargement: Theory & Challenges

Readings:

1. Frank Schimmelfennig; Ulrich Sedelmeier, Theorizing EU enlargement: research focus, hypotheses, and the state of research. Journal of European Public Policy, Volume 9, Issue 4 August 2002 , pages 500 - 528. (Download: Theorizing EU enlargement: research focus, hypotheses, and the state of research
2. Willem H. Buiter and Anne C. Sibert, `Eurozone Entry of New EU Member States from Central Europe: Should They? Could They?’

Lecture 10. The EU and Ireland. Ireland is the poster-child for the benefits of accession to the EU, but has bucked the trend in two successive treaty referenda. Other small open economies have not done so well. What does continued membership of the EU mean for Ireland today?

Readings:

1. * Barrett, A., Bergin, A., and Duffy, D. `The Labour Market Characteristics and Labour Market Impacts of Immigrants in Ireland, The Economic and Social Review, Vol. 37, No. 1, Spring 2006.
2. McAleese, D. `Policy Objectives and Competitiveness for a Regional Economy’, in O’Hagan and Newman, eds. The Economy of Ireland: National and Sectoral Policy Issues, 9th ed., pgs. 2—28. 330.94178024 OHA
3. European Union, 2008 The EU in Ireland.

Lecture 11. Recap. Readings: All of them!