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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/18707
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| Title: | | How should large and small countries be represented in a currency union?  |
| Authors: | | Berger, Helge Mueller, Till |
| Issue Date: | | 2004 |
| Series/Report no.: | | CESifo working papers 1344 |
| 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. |
| Subjects: | | Central Bank Federal Central Bank Currency Union optimal representation voting ECB |
| JEL: | | E52 D72 F33 E58 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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