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Chapter 2: Empirical Methodology in Private investment with social benefits under uncertainty: The dark side of public financing. in European Parliament, Directorate-General for Parliamentary Research Services, Saulnier, J., Improving the quality of public spending in Europe – Budgetary ‘waste rates’ in EU Member States, European Parliament, 2020 Available at

Chapter introduction

In this chapter we search for normative criteria to guide our empirical analysis, looking for arguments that can support or oppose the allocation of a given policy area to the EU level. We begin with an analysis of the fiscal federalism literature. Although this literature has been developed in different contexts from the EU, it provides plenty of theoretical and empirical results that can be useful to discuss the issues of centralization/decentralization at the EU level. We specifically conclude that for our aims, the original Oates’ recipe for (de-)centralization is still useful, although in discussing its application to specific policy fields we will also make reference to the insights of the most recent literature (“second-generation” models). Building on this general discussion, we then present in detail the approach that we will follow in the next chapters to estimate the potential advantages of moving a function from MS to the European budget. Key to our research is thenotion of waste; how much money could be saved if this function was moved to the EU level. We explain the methodology that we follow in the next chapters to measure this waste as well as the limitations of our approach. We also compare our approach with previous attempts in the literature, explaining the advantages and limits of our approach with respect to others. The chapter concludes with a road-map for the empirical chapters that follow.