E2081
Charles University in Prague
Faculty of Social Sciences, Institute of Economic Studies
Advanced Economics of European Integration
(Jean Monnet permanent course)
2002-2003
Instructor: František Turnovec, e-mail:
Consultation hours: Monday, 10,30-14,00
Level: Advanced course (4th year students), master level
Length: 1 semester, 2/2 (one lecture and one seminar per week)
Course available in English
COURSE INFORMATION
1. INTRODUCTION TO ECONOMICS OF INTEGRATION
The concept of economic integration. Global and regional integration. Forms of economic integration: preferential tariff agreement, free trade area, customs union, single market, economic union, economic and monetary union, political union. From single market to single currency. The process of economic integration, negative and positive integration. Effects of economic integration.
2. MILESTONES OF THE EUROPEAN INTEGRATION
Marshall Plan. The European Coal and Steel Community. European Free Trade Area. Treaty of Rome 1957, Single European Act 1986, Maastricht Treaty 1992, Amsterdam Treaty 1997, Nice Treaty 2000. Deepening and widening. EU past enlargements. Perspectives of East European enlargement.
3. WELFARE EFFECTS OF TRADE
Measuring welfare effects, a partial equilibrium approach. Consumers' surplus and producers' surplus. Welfare effects of free trade. Welfare effects of trade protection. Tariffs and quotas. Multi-commodity markets. Closed equilibrium on a multi-commodity market. Welfare analysis of the closed multi-commodity equilibrium. Welfare analysis of the free trade multi-commodity equilibrium. Welfare analysis of the tariff protection multi-commodity equilibrium.
4. TRADITIONAL THEORY OF THE CUSTOMS UNION
Viner's theory of customs union. Trade diversion and trade creation. Partial equilibrium model: one commodity, customs union of a small country and a big country. Tariff reduction vs. customs union. One commodity, customs union of two small countries. Welfare effects of customs union.
5. THE THEORY OF CUSTOMS UNION - A GENERAL EQUILIBRIUM APPROACH
A general equilibrium model. Two commodities, one big and one small country. Two commodities and two small countries. Welfare effects.
6. THE THEORY OF COMMON MARKET
Single market and common market. Free factor mobility. Integration of factor markets. Interrelations between goods and factor markets and the effects of barriers to movement. Mobility of one factor of production. Labour migration effects. Mobility of all factors of production. Partial market and general equilibrium approach. Towards a theory of international production.
7. ELEMENTS OF THE THEORY OF MONETARY UNION
Economic and political aspects of European monetary integration. Market developments in the run-up to 1999 and 2002. A brief visit to the theory of optimum currency areas. The EMU and European Central Bank - its role, organisation ad planned array of monetary policy targets and instruments. The links between European monetary policy and national fiscal policy. Its likely usage, strength or weakness; the Euro' role as an international reserve currency. Euro-denominated money and capital market instruments. The interim period: the Euro as a parallel currency. Post 1999 intra-EU economic and market dynamics. The issue of potential tensions between EMU and non-EMU currencies.
8. BUILDING THEORETICAL BACKGROUND - INTERNATIONAL
MICROECONOMICS
A simple model of world economy. Model of interacting of national economies. Closed equilibria of national economies, general free trade equilibrium, general tariff protection equilibrium, coalition equilibria. Integration games.
9. REGULATION AND MICROECONOMIC POLICIES IN ECONOMIC INTEGRATION
Forms of regulation. Trade and industrial policies. Welfare effects of monopoly regulation. Agricultural policy, welfare and price support mechanism. Regional policies and political economy of regional redistribution.
10. EXTENSION AND THE CZECH REPUBLIC ON ITS WAY TO THE EUROPEAN UNION
Comparative analysis of the EU member states and candidate countries. Position of the Czech Republic in international division of labour. Trade with EU. Economic transformation and European integration. Costs and benefits of joining the EU.
READING LIST
Avery, G. and F. Cameron: The Enlargement of the European Union. Sheffield Academic Press, 1998.
Courbis, R. and W. Welfe (eds.): Central and Eastern Europe on its Way to European Union, Simulation Studies Based on Macromodels. Peter Land, Frankfurt am Main, Berlin, 1999.
De Grauwe, P.: The Economics of Monetary Integration. Oxford University Press, 1992.
Duff, A.: The Treaty of Amsterdam. Sweet and Maxwell, London, 1997.
Feldman, A. M.: Welfare Economics and Social Choice Theory. Kluwer Academic Publishers, Boston 1989.
Gross, D.: Towards Economic and Monetary Union. Problems and Perspectives. CEPS, Brussels, 1996.
Hagen, J., Kumar, A. and E. Kawecka-Wyrzykowska: Coming to Terms with Accession. CEPR, EPI, London, 1996.
Hansen, J. D. and U.M. Nielsen, An Economic Analysis of the EU, McGraw-Hill, 1997.
Molle, W.: The Economics of European Integration. Dartmouth Publ. Comp., Aldershot, 1996.
Kirchner, Emil J.: Decision Making in the European Community. Manchester University Press, 1993.
Pelkmans, J.: European Integration, Methods and Economic Analysis. Addison Wesley Longman Limited, New York, 1997.
Swann, D.: European Economic Integration. The Common Market, European Union and Beyond. Edward Elgar, 1996.
Turnovec, F.: Political Economy of European Integration. Karolinum, Prague, 2002.
Agenda 2000, For a Stronger and Wider Union. Bulleting of the European Union, Supplement 5/97, Brussels 1997.
RULES FOR GRADING
1. Presentations and Essays. On the basis of individual presentations during the seminars each student will prepare a short essay (about 10 pages) on a topic related to methodological and empirical issues of political economy of European integration. Dead-line for submitting the essays is December 16, 2002. Submission of the essay is a necessary condition for credit (only those students who will submit essays can register for the final exam). Schedule and topics of presentations and essays should be discussed on an individual basis during the consultation hours.
2. Exams. There will be a midterm exam in November 12, 2002. The final exam will take place during January, 2003. Both midterm and final exams will have written form (test with problems to be solved and questions to be answered).
3. Weights for grading.
Midterm exam weight20%
Essay weight30%
Final exam weight50%