Working Paper: CEPR ID: DP7220
Authors: Heikki Kauppi; Mika Widgrn
Abstract: It is a constant topic of debate how the European Union (EU) spends the money it collects from its member states. This paper supports the idea that the EU budget battle involves one-shot games that have persistent impacts on the budget allocations. In one way or the other, the member states are able to establish rules or contracts that restrict the budget allocation in advance. In the current status quo, France and Spain are the clearest winners of these restrictions, while Austria, Finland and Sweden, not to mention the new member states, suffer largest losses.
Keywords: EU budget; power indices
JEL Codes: C71; D70; D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Predetermined budget rules (H61) | EU budget allocation (H61) |
| France's power distribution (L94) | France's budget allocation (H61) |
| Austria, Finland, Sweden's power distribution (L94) | Their budget allocations (H61) |
| Power distribution (SSI) (D39) | EU budget allocation (H61) |
| Contributions to budget (H69) | EU budget allocation (H61) |
| Power distribution (SSI) (D39) | Allocation of compulsory expenditures (H61) |
| Allocation of compulsory expenditures (H61) | EU budget allocation (H61) |
| Noncompulsory expenditures (H59) | EU budget allocation (H61) |
| Member states' contributions (F55) | Budget shares (H61) |