Dr
EC2006 Economics of the European Union
Autumn 2009-10
LECTURE: Thu 9-11 LC216
SEMINAR: Wed 9-10 LC210
Office Hours: Tue/Wed 10.30-11.30am
Sample essay 1 (mark: A); Sample essay 2 (mark: B)
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Week |
Topic |
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1 |
Lecture: Introduction; EU history, institutions and basic facts (updated) |
BW 1+2 |
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2 |
No seminar in week 2! |
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Lecture: Decision making (updated) |
BW 3 |
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3 |
Seminar 1. Explain why it is important that the ECJ rulings cannot be appealed in member states’ courts. 2. If the ECJ decides on a matter, is there any way that EU leaders can overrule that decision? 3. In many European nations, the trend of the last couple of decades has been to decentralise decision making from the national level to the provincial or regional level. How could you explain this trend in terms of the theory of fiscal federalism. 4. The 2004 and 2007 EU enlargements greatly increased the
diversity of preferences inside the EU. Use the theory of fiscal federalism
to discuss how this change might suggest a different allocation of
competencies (decision-making powers) between the EU and the |
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Lecture: Preferential trade liberalization and EU trade policy (updated) |
BW 4+5+15 |
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4 |
Seminar 1. Consider
a 2. Using a diagram, show
the full Foreign welfare effects of imposing a Home tariff equal to T, i.e.
show the impact on Foreign producers and Foreign consumers separately. 3. One can think about the
slope of the MS curve is in terms of the ‘size’ of the home nation: a small
country has a very small impact on the world price and its MS curve is
therefore essentially flat. Using a diagram, show that when the MS curve is
perfectly flat, the welfare effects are unambiguously negative. 4. Consider the welfare impact of Home imposing a tariff on Foreign exports and Foreign retaliating with a tariff on Home’s exports. Assume that the MS and MD curves for both goods (Home exports to Foreign and Foreign export to Home) are identical. |
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Growth effects of economic integration (updated) |
BW 7 |
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5/6 |
Seminar 1. Show that
it is possible for Home and Partner to form a customs union and lower
their common tariff against RoW to the point where
the new border price faced by RoW exporters is the same
as it was before the liberalisation, i.e. P’-T. Show that this adjustment
ensures that Home and Partner gain while RoW does
not lose from this customs union. 2. Suppose that signing an
customs union between Home and Partner produces a growth effect that raises
their income level and thus shifts their MD curves upwards. Use a diagram to
show a sufficiently big upward shift in Home and Partner MD curves would
ensure that RoW did not lose from this customs
union. 3. When the
German re-unification took place, 4. It is often said that the prospect of EU
membership made Central European nations a better, safer place to invest.
Using the Solow diagram, show how this would affect growth in these nations. |
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Economic integration and migration (updated) |
BW 8+ZZ |
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6 |
Seminar 1. Explain
why the immigration of low-skilled workers hurts native low-skilled workers
and benefits high-skilled workers. 2. Consider the analytical framework introduced in
the lecture but assume that all immigrants are high-skilled workers and that
low-skilled and high-skilled workers are complementary. Discuss how this
affects the low-skilled workers in the Home country (hint: as the two kinds
of labor are complementary, immigration of
high-skilled workers raises the marginal product of low-skilled workers). 3. Freedom to
live and work in any EU country is one of the key elements of the Single
Market Program. Discuss the main benefits and costs associated with free labor mobility in the EU. Feel free to go beyond economic
considerations (e.g. social, political or cultural implications of labor mobility). 4. Discuss arguments in favour and/or against
imposing transitional arrangements on labor
migration from those countries that joined the EU in 2004 and 2007. |
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7/8 |
Seminar 1. Discuss
what is occupational downgrading of immigrants and why it might occur. 2. Discuss brain drain and its implications for the
sending and receiving country. |
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FG+FGW |
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8 |
Seminar 1. The majority of immigrants to the |
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(a) Common agricultural policy (updated); and (b) Economic geography and regional policy (updated) |
BW 12 + 13 |
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9 |
Seminar 1. Discuss factors that may affect the choice of
linguistic regime in a multilingual country or organization. 2. In 2003, the world
wheat price is above the CAP’s target price so the
price floor has become a price ceiling. (i) Using a
diagram, show how the EU could implement the price ceiling with an export
tax. (ii) What are the welfare effects of this policy? 3. Before the 4. The educational level in all EU nations is rising. How would this affect the spatial allocation of production |
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10 |
Monetary Integration in Europe
(updated) Seminar 1. During the Asian Crisis of 1997-98, Malaysian
currency depreciated sharply. The government responded by imposing strict capital
control and pegged the exchange rate to the US dollar. Use the concept of the
Impossible Trinity to discuss the merits of this approach. What drawbacks
does the Malay approach have in the long term? 2. The Danish people have rejected, by
referendum, joining the Eurozone. Yet, 3. In the analysis of asymmetric shocks in the
context of the OCA Theory, it is asserted that the real exchange rate l
= EP/P* can be
depreciated either through a depreciation of the nominal exchange rate E
or through a change in the price level P. Explain. 4. In the presence of an adverse shock, an
alternative to depreciation of the real exchange rate is to cut imports by
raising tariffs. Why is this alternative usually unpalatable? |
BW 10, 16-18 |
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11 |
Seminar 1. Recently, some Italian politicians have proposed
that 2. `Mandatory capital
mobility-as part of the Single Market-turns out to be a hinderance
to ERM membership by the new member states.’
Comment. 3. Some analysts have recently proposed that the EU
should implement an EU-wide system of unemployment insurance. Discuss how
this would affect the prospects for continuing and widening monetary
integration in 4. Could immigration be a solution to the lack of labor mobility in 5. Why are Europeans less mobile than Americans? Note
that low mobility is not just observed across national borders but also
within each country. What measures could increase labour mobility in 6. It is sometimes argued that because automatic
stabilizers play a more important role in Europe than in the |
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12 |
Revision lecture |
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BW |
Richard Baldwin and Charles Wyplosz, The Economics of European Integration, 3rd edition, McGraw-Hill, 2009, purchase strongly recommended. |
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FG |
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FGW |
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ZZ |
Anzelika Zaiceva and Klaus F.
Zimmermann, “Scale, Diversity and Determinants of Labour Migration in
Europe,” |
Last updated: 6 December 2009.