When is Policy Harmonisation Desirable?

Michael Keen, Sajal Lahiri and Pascalis Raimondos ()

No 98-02, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: This paper establishes, in a very general setting, necessary and sufficient conditions for harmonization of economic policies to be welfare-improving. As an application, it is shown that under circumstances in which harmonization is known to be welfare-improving when taxes are levied on a destination basis it is unambiguously welfare-reducing when (as the European Commission has recently proposed) they are levied on an origin basis.

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