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National Representation in Multinational Institutions: The Case of the European Central Bank

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  • Harald Badinger
  • Volker Nitsch

Abstract

Multinational institutions face an important trade-off when hiring personnel. On the one hand, hiring decisions are based, as in most organizations, on a candidate’s professional qualifications. On the other hand, multinational institutions often aim for broad national representation. Reviewing evidence from the European Central Bank, we show that nationality is indeed relevant for both hiring and decision-making. Specifically, we identify various country-specific features that determine national representation in the top management of the ECB. Further, there is evidence for the existence of national networks between adjacent management layers. Finally, monetary policy decisions seem to be linked to national representation in the core business areas of the ECB. Examining a sample of 14 European countries over the period from 1999 to 2008, we estimate Taylor rules for alternative sets of euro area aggregates derived from different weighting schemes of national macroeconomic data. Our results indicate that weights based on national representation in the mid-level management of the ECB's core business areas best describe the central bank's interest-rate setting behavior.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3573.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3573

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Keywords: organization; central bank; nationality; monetary policy;

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References

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  1. Dreher, Axel & Lamla, Michael J. & Lein, Sarah M. & Somogyi, Frank, 2009. "The impact of political leaders' profession and education on reforms," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 169-193, March.
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Blog mentions

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  1. The Italian Job – How Passports Influence Monetary Policy Decisions
    by Olaf Storbeck in Economics Intelligence on 2011-11-01 14:47:39
  2. â??The Italian Jobâ? â?? Die EZB und ihre Lebenslüge
    by Olaf Storbeck in Handelsblog on 2011-11-01 10:20:39

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