Institutional Reform in the European Union: Economic Governance and the Introduction of a European Assembly

In this paper we present a game-theoretical analysis of the proposed Treaty for the Democratization of Europe, formulated by Thomas Piketty and others in 2017 to reform the institutional framework of the European Union (EU). The proposal focuses on economic governance, and seeks to render it more efficient and democratic. Its main features are the introduction of a European Assembly, consisting mostly of national parliament representatives and for the remainder of European Parliament representatives, an enhanced role for the Eurogroup, and a reform of the ordinary legislative procedure that would give the European Assembly the final say. To test the conclusions of our spatial, game-theoretical model we construct a database of policy positions of EU office-holders using the Chapel Hill Expert Survey dataset. We conclude that Piketty’s proposal can indeed lead to more efficient decision-making, but does not lead to significantly more progressive, left-leaning policies, contrary to what was envisioned by Piketty. The policy effects largely depend on differences in preferences of office-holders, rather than new institutional features. Furthermore, we find that the introduction of a European Assembly does not significantly improve the democratic character of the EU.