How should large and small countries be represented in a currency union?
Berger, Helge ;  Müller, Till ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleHow should large and small countries be represented in a currency union?
AuthorBerger, Helge
AuthorMüller, Till
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages41 S.
Series ; 2004,20 : Volkswirtschaftliche Reihe
KeywordsCentral Bank, Federal Central Bank, currency union, optimal representation, voting, ECB
Classification (DDC)330 Economics
Also published in
AbstractThe 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 re‡ect 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 princi-
ple”. 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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FU DepartmentDepartment Business and Economics
Year of publication2004
Type of documentBook
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Created at2008-07-08 : 09:20:20
Last changed2016-01-05 : 02:38:04
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000000459