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One Country, One Vote? Labor Market Structure and Voting Rights in the ECB

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  • Helge Berger
  • Carsten Hefeker

Abstract

The pending enlargement of the European Monetary Union (EMU) has brought to the fore the discussion of the voting right distribution in the European Central Bank (ECB) council. We show that, in a model where labor unions internalize the inflationary consequences of wage setting, deviating from a voting scheme based purely on economic size can be beneficial. Preliminary evidence on unemployment and voting rights in the ECB council seems broadly in line with this idea. We also point to possible policy implications for EMU enlargement and ECB restructuring.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-03/cesifo1_wp1165.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1165.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1165

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Keywords: monetary policy; wage setting; European Monetary Union; European Central Bank; euro area; ECB reform; EMU enlargement; accession countries;

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References

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  1. Cukierman, Alex & Lippi, Francesco, 2001. "Labour Markets and Monetary Union: A Strategic Analysis," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(473), pages 541-65, July.
  2. Benigno, Pierpaolo, 2004. "Optimal monetary policy in a currency area," Journal of International Economics, Elsevier, Elsevier, vol. 63(2), pages 293-320, July.
  3. von Hagen, Jurgen & Suppel, Ralph, 1994. "Central bank constitutions for federal monetary unions," European Economic Review, Elsevier, Elsevier, vol. 38(3-4), pages 774-782, April.
  4. Helge Berger & Jakob Haan, 2002. "Are small countries too powerful within the ECB?," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 30(3), pages 263-282, September.
  5. Daniel Gros & Carsten Hefeker, 2000. "One Size Must Fit All. National Divergences in a Monetary Union," CESifo Working Paper Series 326, CESifo Group Munich.
  6. Berger, Helge & de Haan, Jakob & Eijffinger, Sylvester C W, 2001. " Central Bank Independence: An Update of Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 15(1), pages 3-40, February.
  7. Grüner, Hans Peter, 1999. "On the Role of Conflicting National Interests in the ECB Council," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2192, C.E.P.R. Discussion Papers.
  8. Casella, Alessandra, 1992. "Participation in a Currency Union," American Economic Review, American Economic Association, American Economic Association, vol. 82(4), pages 847-63, September.
  9. Carsten Hefeker, 2003. "Federal Monetary Policy," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(4), pages 643-659, December.
  10. Skott, Peter, 1997. "Stagflationary Consequences of Prudent Monetary Policy in a Unionized Economy," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 609-22, October.
  11. De Grauwe, Paul, 2000. "Monetary Policies In The Presence Of Asymmetries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2393, C.E.P.R. Discussion Papers.
  12. Paul De Grauwe, 2000. "Monetary Policies in the Presence of Asymmetries," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(4), pages 593-612, November.
  13. Gruner, Hans Peter & Hefeker, Carsten, 1999. " How Will EMU Affect Inflation and Unemployment in Europe?," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 101(1), pages 33-47, March.
  14. Helge Berger, 2002. "The ECB and Euro-Area Enlargement," IMF Working Papers, International Monetary Fund 02/175, International Monetary Fund.
  15. Cukierman, A. & Lippi, F., 1998. "Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Some Evidence," Discussion Paper, Tilburg University, Center for Economic Research 1998-116, Tilburg University, Center for Economic Research.
  16. Ellen E. Meade & D. Nathan Sheets, 2002. "Regional influences on U.S. monetary policy: some implications for Europe," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 721, Board of Governors of the Federal Reserve System (U.S.).
  17. Cubitt, Robin P, 1992. "Monetary Policy Games and Private Sector Precommitment," Oxford Economic Papers, Oxford University Press, vol. 44(3), pages 513-30, July.
  18. Guzzo, Vincenzo & Velasco, Andres, 1999. "The case for a populist Central Banker," European Economic Review, Elsevier, Elsevier, vol. 43(7), pages 1317-1344, June.
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Citations

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Cited by:
  1. Ullrich, Katrin, 2004. "Decision-Making of the ECB: Reform and Voting Power," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 04-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Jürgen Bitzer & Wolfram Schrettl & Philipp J.H. Schröder, 2005. "Intrinsic Motivation in Open Source Software Development," Development and Comp Systems 0505007, EconWPA.
  3. Boom, Anette, 2004. ""Download for Free" - When Do Providers of Digital Goods Offer Free Samples?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 70, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Zemanek, Holger, 2009. "Country Size and Labor Market Flexibility in the European Monetary Union: Why Small Countries Have more Flexible Labor Markets," MPRA Paper 16482, University Library of Munich, Germany.
  5. Volckart, Oliver & Wolf, Nikolaus, 2004. "Estimating medieval market integration: Evidence from exchange rates," Discussion Papers 2004/21, Free University Berlin, School of Business & Economics.

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