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One Market, One Voice ?

avec Benoît Coeuré, octobre 2003

  One Market, One Voice ?, with Benoît Coeuré, October 2003. A paper on EU arrangements for external economic relations (preliminary conference version).

Abstract : This paper questions the optimality of EU arrangements in international economic relations. Depending on the issues under discussion, competence for external relations is devoted to a federal institution, to the member states, or shared between both levels. As it seems, external representation is mainly the reflect of existing arrangements for internal decision-making. This cannot be optimal, since there is no reason why the mix of externalities and heterogeneity of preferences among member states should be the same for internal and external matters. Drawing on recent developments of incomplete contract theory, we therefore look more closely at the ex-ante and ex-post efficiency of three alternative schemes which provide a reasonably accurate representation of current arrangements : unconditional delegation, supervised delegation and coordination. We then apply this filter to an analysis of recent discussions in three fields : trade, financial stability, and macro-economic surveillance. We conclude by reviewing possible reforms in external representation.