Author (Person) | Berger, Helge, Mueller, Till |
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Series Title | CESifo Working Papers |
Series Details | No 1344, November 2004 |
Publication Date | 2004 |
Content Type | Journal | Series | Blog |
Abstract 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. |
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Source Link | Link to Main Source http://www.cesifo.de/~DocCIDL/cesifo1_wp1344.pdf |
Subject Categories | Economic and Financial Affairs |
Countries / Regions | Europe |