EC4333, Semester 1, 2006/7
Stephen Kinsella
Department of Economics,
Kemmy Business School,
University of Limerick
http://www.stephenkinsella.net
2006-09-04
1 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 course 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 course in International Economics or naive Trade theory. Rather, this course
will focus on developing the appropriate models and conceptual frameworks to understand
a particular issue facing the EU today. The objective of the course is to inform potential
future policy makers of the issues at stake and equip them with the tools to analyze these
issues.
1.1
1.1 Grading
There will be a final exam worth 70% of your final grade, four bi-weekly problem sets worth 5% each
beginning in week 3, and an essay worth 10%.
Problem sets will be distributed in class, with each due the next class each week. The essay title
is
the present day. Discuss either the potential economic effects of the fifth enlargement,
enacted in May 2004, on Ireland’s economy or discuss the role of the Common
Agricultural Policy (CAP) in the constitutional negotiations of the early 2000s and
theorize as to how to overcome the stumbling block the CAP represents. Situate either
discussion in the context of the history of the EU to date.
Essays should be no longer than 10 A4 pages, typeset in Times New Roman font, size 11. Ensure you
reference all articles and data used. The essay will be due by the fifth week of term, no later than Monday,
23rd October.
1.2
1.2 Course Notes and Textbook
There is no one textbook for the course. Readings are taken from many textbooks, and all are
available online as a coursepack at http://www.stephenkinsella.net. Course notes and (hopefully) a
podcast of the lecture will be available from the site after each lecture. Attendance at lectures is
mandatory.
2
2 Course Outline
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. Thus there are eleven lectures and a recap lecture at the end of the
course. All readings available in the library have their codes given in sans serif font to speed you in finding
them. Readings marked with a (*) will be distributed on a CD at the start of the class, and are available
as a single .pdf file from the course website.
Lecture One Introduction to the course, definition of ’economic integration’, history of the
institutions of the European Union to date. Readings: none
Lecture Two History of the EU to date continued, Institutional Analysis of the dynamic of European
integration and the stages of economic integration (customs union-common market-economic and
monetary union) especially the fifth enlargement and the Treaty of Rome. Structure of the EU.
Readings:
- Beach, D., The Dynamics of European Integration, pgs. 1–31, and pgs. 214–244, 337.142
- BEA.
- El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs 1-19 and
72-79, 337.142 AGR. - McDonald, F. and Dearden, S. European Economic Integration, 3rd ed., pgs 34-53,
- 337.142 MCD.
Lecture Three Economic and Monetary Union, development of current policies and prospects for the
future. Models of Customs Unions for Product and Factor Markets and empirical results on levels of
integration across these markets Readings:
- Pelkmans, J. European Integration: Methods and Economic Analysis 1st ed., pgs. 83–104
and 133–155. 337.142 PEL. - El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs. 149–164,
- 337.142 AGR.
- Lane, P. (2006) The Real Effects of EMU, Journal of Economic Perspectives,
forthcoming. (*)
Lecture Four Economic and Monetary Union Continued, theories of Monetary Union. Readings:
- Buiter, W.H. “The Economic Case for Monetary Union in the European Union”, in
Deissenberg, Owen and Ulph, eds. European Economic Integration, published as a
supplement to the Review of International Economics, Vols. 4-5., pgs. 10–35. 337.142 - DEI.
- Hansen, J.D., European Integration: An Economic Perspective, Oxford University Press,
2001, 1st ed. pgs. 163-189, 337.142 DRU. - Healey, N. ‘Economic and Monetary Union’, in McDonald, F. and Dearden, S. European
- Economic Integration, 3rd ed., pgs. 94–114, 337.142 MCD.
- Wyplosz, C. ‘European Monetary Union: The Dark Sides of a Major Success’, Economic
- Policy, 2006 (*)
Lecture Five The Common Agricultural and Fisheries Policies, history, theory, and analysis.
Readings:
- El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs. 232–261,
- 337.142 AGR.
- Pelkmans, J. European Integration: Methods and Economic Analysis 1st ed., pgs.
164–182. 337.142 PEL.
Lecture Six Competition Policies, Regional Policies and Environmental Policies in the EU.
- El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs. 388-399
and 187-199, 337.142 AGR. - Pelkmans, J. European Integration: Methods and Economic Analysis 1st ed., pgs.
164–182. 337.142 PEL.
Lecture Seven Economic Inequality across the EU.
- Michie, J., ‘Unemployment in Europe’, in Amin and Tomaney, eds. Behind the Myth
- of European Union: Prospects for Cohesion, Routledge Press, 1995, pgs. 51–82. 337.14
- AMI.
- Jensen, S. E. H. “Wage Rigidity, Monetary Integration and Fiscal Stabilisation in
Europe”, in Deissenberg, Owen and Ulph, eds. European Economic Integration, published
as a supplement to the Review of International Economics, Vols. 4-5., pgs. 36-54. 337.142 - DEI. (Note, this is a hard paper, but students who know calculus should attempt it.)
- Bertola, G. ‘Europe’s Unemployment Problems’, in Artis and Nixson, eds. The
- Economics of the Europen Union, 3rd ed., pgs. 353–381.
Lecture Eight Enlargement: Factor Mobility and Political Economy of accession to the
EU.
- Estrin, S. and Holmes, P. Competition and Economic Integration in Europe, pp. 1–22.
- 337.142 EST
- Smith, E. ‘EU Competition Policy Without Membership: Lessons for the European
Economic Area’, in Estrin, S. and Holmes, P. Competition and Economic Integration in - Europe, pgs. 48–60. 337.142 EST
- Willem H. Buiter and Anne C. Sibert, ‘Eurozone Entry of New EU Member States from
Central Europe: Should They? Could They?’ (*)
Lecture Nine Location Effects, Regional and Industrial Policy. Deeper EU integration may have
significant implications for the economic activity of member states. Changing trade relations,
increasing competition, and the increased mobility of goods, services and people will all
affect the location of industries across the EU. How should member states and the EU
react? Can an active industrial policy be justified? What form should regional policy
take?
- Puga, D., ‘European regional policy in light of recent location theories’, Journal of
- Economic Geography 2(4), October 2002: 372-406 (*)
- Puga, D. ’The rise and fall of regional inequalities’, European Economic Review 43(2),
February 1999: 303-334.(*)
Lecture Ten International Trade, Tariffs, and Globalization. The EU is the largest trading bloc in the
world. What are the effects one might expect from a economic entity as large as the EU changing its
trade-tariff policies?
- Stiglitz, J.E., and Greenwald, B. Helping Infant Economies Grow: Foundations of Trade
Policies for Developing Countries, American Economic Review, Papers and Proceedings,
May 2006. (*) - Shaikh, Anwar, Globalization and the Myth of Free Trade.(2003) Prepared for the
Conference on Globalization and the Myths of Free Trade, New School, NYC.(*)
Lecture Eleven The Eu and Ireland. Ireland is the poster-child for the benefits of accession to the EU.
Other small open economies have not done so well. What does continued membership of the EU
mean for Ireland today?
- 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. - 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
Lecture Twelve Recap lecture. Readings: All of them!