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We address empirically trust as a determinant of support for government intervention. The central notion provided in the present paper is that the influence of generalized social trust on intervention attitudes is conditional on the perceived reliability, honesty, and incorruptibility of state actors and of major companies. Starting point is an idea by Aghion, Algan, Cahuc, and Shleifer (2010) that individuals who generally distrust others have a stronger taste for a regulation of economic activities, while people with high interpersonal trust are in favor of less strict regulations and state control. This line of argumentation neglects that (lack of) trust spills over to distrust in both governmental as well as in private institutions. People who tend to (dis-)trust other unknown people also tend to (dis-)trust state actors and private sector actors. Estimating the determinants of interventionist preferences with data from the World Values Survey/European Values Study for approximately 100,000 -115,000 individuals in 37 OECD- and EU-countries, we show that the impact of social trust on government intervention attitudes is conditional on individual confidence in state actors and in companies.

This paper addresses empirically determinants of individual support for the Welfare State. We examine the interrelation of informal institutions with the perceived quality of a country's institutional framework. As a proxy for informal institutions, we concentrate on three core beliefs (trust in other people, perceived control over one's own life, and religiousness) which reflect different aspects of the way people feel about internal and external constraints in managing their own lives. To analyze preferences we follow a comprehensive concept of the Welfare State, measuring attitudes toward its two basic roles, (income) redistribution and government intervention. For this purpose the paper uses survey data from the World Values Survey/European Values Study as well as different indicators for governance quality. Our results indicate that people who interpret their life course as being not at their own disposition report a substantially more positive attitude toward income equalization and government interventions. A higher quality of public administration and low confidence in major private companies amplify preferences for redistribution and intervention of people under such an external locus of control. Social trust is generally associated with higher support for redistribution and government intervention only if perceived quality of administration is high and confidence in companies is low. People who assert themselves as religious are less favorable toward income equalization. While variation in administration quality does not appear to have an impact on the relationship between religiousness and income equalization preferences, religious people are substantially less supportive of redistribution and government intervention especially if confidence in major companies is high.

Despite significant measures to reinforce the EMU's institutional set-up, there is widespread consensus that more needs to be done in order to better deal with cyclical and structural heterogeneity in the EU. Market-based adjustment mechanisms are necessary but not sufficient to advance convergence along more sustainable growth patterns. In that context, institutional reforms advancing integration in the Eurozone are often said to be desirable from an economic point of view, albeit fraught with political difficulties. This paper seeks to provide a fresh outlook on this debate by bringing forward a third, overlooked dimension, namely the feasibility, or 'implementability', of governance reforms. Like national technocracies, the EU faces the risk of failure whereby the creation of institutions or the introduction of new policies do not always bring about the expected outcomes. The paper develops a multi-criteria analytical framework to assess three possible innovations of economic governance: rule-based wage coordination, contractual arrangements for reforms, and a stabilisation fund for the Euro area. The 'robustness' of any proposal seeking to increase the EU's interference into national policy-making should start with a clear economic justification, while taking the dynamics of national preferences into account. However, the risks of moral hazard and institutional barriers should also be systematically internalised in the assessment. After outlining the analytical framework (section 1), the paper assesses the three tentative reforms by using a wide range of data and analyses from existing EU documentation, academic and policy literature, and opinion surveys (sections 2 to 4). Each section ends with some recommendations on the desirable scope and design of reforms. Overall, the three case studies stress the need for a careful and reasoned approach to reforming EU governance. Beyond the predictable clash of economic rationales and political hurdles, reform ideas tend to overlook the difficulties arising at the implementation stage. Diverse wage-setting systems, low administrative capacities, and statistical uncertainty for instance all warn against 'more EU money' or 'EU interference'. The paper, therefore, makes the case for experimental and small-scale innovations and for a much greater engagement of the public in the politics of EU coordination.

The European integration process is ongoing. Europe is still heterogeneous. Within this context, the paper addresses the question of whether policies in the EU should head towards autonomy, coordination or harmonization. Taking the path dependence effect into account, in the papers' opinion, Europe has gone too far in its integration process to be able to continue with policies fully under the competencies of individual member countries. Furthermore, the establishment of the common currency in the EU as a result of deep harmonization in the monetary policy area is an unambiguous precedent with many consequences. First of all, the habitual question still arises in the literature: does fiscal policy need to be harmonized to a comparable level, as these two policies necessarily complement each other? The paper argues that it does not. First, the authors build on the theory of fiscal federalism, which often recommends the strengthening of the stabilization function of public finance; typically in the form of rules and surveillance institutions (e.g., Fiscal Compact, the Six-Pac, European Semester). And on the contrary, they usually refute the intensification of the redistribution function, due to the fact that intergovernmental transfers in contemporary Europe are highly unpopular. Second, Europe is still too heterogeneous and it will continue to be so in the future, simply because of the different cultures, mentalities, traditions, social relations and ways of thinking it harbours. In our context, this means that there are significantly different regimes of welfare states and extents of social policies among European countries, which strongly determine the character of public finance. And third, the tax systems across Europe are also highly divergent, with many different features of continued tax competition. Therefore, a top-down harmonization path towards a full fiscal union is neither politically enforceable, nor economically rational. On the other hand, in order to keep the European integration process viable, it is necessary to reduce behaviour with features of moral hazard and free ride and strengthen joint responsibility for the fiscal development of public finances in the EU. In addition to the discussed matter of joint responsibility and fiscal discipline, the paper points out the open coordination method as an approach towards a sustainable alternative path between a fragmented Europe and a European super state.

The paper assesses the heterogeneity of an enlarged European Union and discusses the role and contribution of CEECs on the development of this heterogeneity over time. The two central research questions are: What are the factors that distinguish between successful and less successful CEE countries in terms of the EU enlargement? How was heterogeneity in the EU developed in the last decade? Using cluster analysis methods allow the focusing on heterogeneity in the five selected dimensions of interest: Institutions and Governance; Single Market and Openness; Macroeconomic Policies; Symmetry and Convergence; and Competitiveness. We can find that the specific macroeconomic policies followed by CEE countries during the transformation period were less decisive for a successful transition than the level of (non-elite) political stability, the quality of institutional framework, the maturity and compatibility of informal institutions and the initial level of economic development. We also can find substantial convergence in terms of economic indicators in the EU in the period considered but none or a very slow convergence in terms of institutional indicators. The negative consequences of such heterogeneity were strengthened by the crisis. As a consequence the tensions caused by these different speeds of convergence in different fields challenge the long-term sustainability of EMU, and the consequences of this situation should be more intensively discussed in the EU. We also argue that the experience of transition of CEE countries holds valuable lessons for the currently discussed reforms of the southern periphery of Europe. Similarly to the CEECs before their entrance to the EU, the periphery countries need to find a direction to head for in the next 10-15 years. Budgetary savings are inevitable; nevertheless positive long-term visions should be formulated as well.