How Should Large and Small Countries Be Represented in a Currency Union?

Berger, Helge; Mueller, Till

doi:10.2139/ssrn.633781

SSRN Journal

2004

DOI: 10.2139/ssrn.633781

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How Should Large and Small Countries Be Represented in a Currency Union?

Helge Berger

Till Mueller

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Cited by 13 publications

References 18 publications

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How should large and small countries be represented in a currency union?

Berger

Mueller

2007

Public Choice

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The likely extension of the euro area has triggered a debate on the organization of the ECB, in particular on the apparent mismatch between relative economic size and voting rights in the Council. We present a simple model of optimal representation in a federal central bank addressing this question. Optimal voting weights reflect two opposing forces: the wish to insulate common monetary policy from changing preferences at the national level, and the attempt to avoid an overly active or passive reaction to idiosyncratic national economic shocks. A perfect match between economic size and voting rights is rarely optimal, and neither is the "one country, one vote principle". Empirically, there are indications that the pattern of over-and under-representation of member countries in the ECB Council might be extreme by the standards of the US Fed and German Bundesbank and not always optimal. Terms of use: Documents inJEL Code: D72, E52, E58, F33.

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How should large and small countries be represented in a currency union?

Berger

Mueller

2007

Public Choice

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Optimal central bank design: Benchmarks for the ECB

Berger

2006

Rev Int Org

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper discusses key elements of optimal central bank design and applies its findings to the Eurosystem. A particular focus is on the size of monetary policy committees, the degree of centralization, and the representation of relative economic size in the voting rights of regional (or sectoral) interests. Broad benchmarks for the optimal design of monetary policy committees are derived, combining relevant theoretical arguments with available empirical evidence. A new indicator compares the mismatch of relative regional economic size and voting rights in the monetary policy committees of the US Fed, the pre-1999 German Bundesbank, and the ECB over time. Based on these benchmarks, there seems to be room to improve the organization of the ECB Governing Board and current plans for reform. Terms of use: Documents in EconStor mayJEL Code: D72, E58.

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Contests with size effects

Eggert

Kolmar

2006

European Journal of Political Economy

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How Should Large and Small Countries Be Represented in a Currency Union?

Cited by 13 publications

References 18 publications

How should large and small countries be represented in a currency union?

How should large and small countries be represented in a currency union?

Optimal central bank design: Benchmarks for the ECB

Contests with size effects

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