Political Science: European And International Governance
European Economics
Summary
European Economics - Summary (19/20) - prof. dr. Caroline Budts
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Course
European Economics
Institution
Vrije Universiteit Brussel (VUB)
Book
The Economics of European Integration 6/e
Summary and detailed notes of all classes of the course European Economics (can also be used for the class Economics of European Integration, as the content is practically the same). This got me a 19/20.
Summary The Economics of European Integration - Economics of European Integration (EC2IEEI) (EC2IEEI)
Notes for Economic Aspects of European Integration
The Economics of European Integration - volledige studiestof samengevat
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Political Science: European And International Governance
European Economics
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EUROPEAN ECONOMICS – SUMMARY
Prof. dr. Caroline Buts
Academic Year 2020-2021
, CLASS 1 – CH 4: INTRODUCTION
INTRODUCTION
Book: Economics of European Integration
- Complement economic theories with empirical examples
- Additional optional readings: Pelckmans, more theoretical
We will follow the structure of the book
- 5 parts
o Part 1: introduction to the EU
§ First 3 chapters of the book
o Part 2: microeconomics of economic integration
§ Lot of time
§ Already start today: main elements of free trade agreements, imposing
tariffs on some countries, not on others
o Part 3: policies (competition policy, agricultural policy, …)
§ Importance of solidarity mechanisms
o Part 4: macroeconomics of economic integration
§ European semester
§ Essential rules
o Part 5: monetary policy
§ Economic Crisis of 2010 and how this improved our macroeconomic policy
coordination
§ What we learned from the Crisis
More in detail à look at the preliminary schedule
OVERVIEW OF THE CLASSES
Today: Ch. 4 and 5
- Important: Ch 4: not directly for the exam, but the tools we need for all the other chapters
o Basic demand-supply mechanisms, import demand, export supply, tariff and what it
does to welfare
o Never on exam: what is a demand curve, consumer surplus
§ But to apply it in the later chapters
- Ch 5: liberalization in the preferential way
o Starting from free trade world à imposition of tariff on imports & exports à looking
at the EU (all other trade agreements in the world) à what happens if a group of
countries decides to liberalize trade, not with the entire world, but with a number of
countries, while other countries are still subject to tariffs
2
,Ch 5-6: growth effects of integration: factor market integration (?)
- All economic rationales regarding integration projects: how they work in theory and whether
they match reality
12/10: build on this and dive into labor market integration
- What happens if we take it a step further
- Free migration of labor and goods
- And how this benefits the market in theory
- Also group-formation exercise
o Group-work
o Fill out questionnaire to find out role and teachers will compose groups
o E.g. company worker, creator, chair …
o Different roles come together to form the perfect team
19/10: Monday no class à replaced by guest lecture on Wednesday 21/10
- Guest lecture about the European Semester, Commissioner speaking
- Via Teams
Afterwards: more policy-related chapters
- Cover different policies (CAP, regional policy, etc.)
23/11: no class
Week 7 & 9: Then, macroeconomics part
- Cover basics and start the presentations in the final weeks
Group work: structure with break-out rooms on Teams
- Every group has name and room, Buts drops in each group for questions etc.
Visit to the EU Parliament
- Large group visits are not allowed yet
o Visit in small groups
o Groups up to 10 ppl
CLASS RULES
- Try to always attend live and participate to the discussion
- Interrupt to ask questions
o Step-by-step to build graphs, draw them together
- There will be some classes with shorter time for the class
- Encourage to make it a zen-moment
o Try not to be distracted
3
, GRADING
Two important parts
- Presentation (25% of grade)
o Half October with group formation
- Written exam (75% of grade)
o Book, slides, lectures (also guest lectures)
o Open questions à choose 2 out of 3 questions
Usually more slides than we cover in class
- Slides we won’t cover à important for general understanding and to fully grasp the book
- The slides we cover together are exam material, the others not so much
BRAINSTORM
ECB
- European Central Bank
- Macroeconomic policy
o Monetary policy
§ Country will change the interest rates
§ Increase: more difficult to take out loans à slow down economy
§ Lower: cheaper to get a loan à boost economy
o Fiscal policy à taxes
§ Lower à boost economy
§ Higher à slow down economy
- Countries that chose to introduce euro à surrendered their monetary policy to the ECB
o They still have their fiscal policy tho
§ Can still play with taxes
o Cannot decide on their own the interest rates anymore
§ Set by the ECB
- Located in Frankfurt
- They set one interest rate for the entire Eurozone
o If you have diff economic circumstances in diff MS, you can still only set one interest
rate
o It’s a coordination for the Eurozone, but very difficult to cater to diff circumstances
o Cfr. prelude to the Crisis
§ Too high for Germany, too low for Spain and Ireland which were fostering a
housing bubble
European taxes
- Fiscal policy has an automatic part
o Economic slowdown: tax revenue is less
- Also tax rates that you can set
o MS still have quite a lot of jurisdiction to set tax levels
§ Companies that operate in diff MS are subject to diff tax levels
4
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