Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76514
Authors: 
Fenge, Robert
Wrede, Matthias
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 1146
Abstract: 
Although decision processes at the EU level are highly complex and often require unanimity, explicit side payments among member states are unknown. However, logrolling and redistributive policies are substitutes. This paper considers the EU regional policy as a substitute for explicit side payments and asks - from a normative and a positive point of view - why matching grants instead of unconditional grants are used although at first sight regional policy is a national and not a union-wide task. It argues that the EU system of own resources creates positive vertical fiscal externalities. Hence, matching grants are part of an efficient grant system and, in so far as bargaining in EU bodies is efficient, matching grants are the natural outcome.
Subjects: 
European economics
regional policy
intergovernmental grants
side payments
vertical fiscal externalities
JEL: 
H54
H77
H87
Document Type: 
Working Paper

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