Allocating Responsibilities in the European Union: an Economic Analysis

The Intergovernmental Conference offers a historic opportunity to rethink and improve the governance and organization of the European Union. At stake is Europe’s political architecture: the form that government takes and the allo-cation of responsibilities between member states and supranational bodies. Many reform proposals have already been offered to the European Constitu-tional Convention. This paper provides a method for evaluating the options, de-veloping an analytical framework derived from recent advances in the theory of positive political economy and fiscal federalism. Assessment of the current EU situation suggests the expediency of reallocating tasks. These reallocations raise specific problems of institution design, which are discussed together with the possible compromises.