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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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-09/cesifo1_wp3573.pdf
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Bibliographic Info

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

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

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Related research

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

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References

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  1. Gohlmann, Silja & Vaubel, Roland, 2007. "The educational and occupational background of central bankers and its effect on inflation: An empirical analysis," European Economic Review, Elsevier, vol. 51(4), pages 925-941, May.
  2. Berger, Helge & Nitsch, Volker, 2008. "Too many cooks? Committees in monetary policy," Discussion Papers 2008/8, Free University Berlin, School of Business & Economics.
  3. Friedrich Heinemann & Felix P. Huefner, 2004. "Is The View From The Eurotower Purely European? - National Divergence And Ecb Interest Rate Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 544-558, 09.
  4. Berger, Helge & Nitsch, Volker & Lybek, Tonny, 2008. "Central bank boards around the world: Why does membership size differ?," European Journal of Political Economy, Elsevier, vol. 24(4), pages 817-832, December.
  5. Michelmann, Hans J., 1978. "Multinational staffing and organizational functioning in the Commission of the European Communities," International Organization, Cambridge University Press, vol. 32(02), pages 477-496, March.
  6. Gerlach-Kristen, Petra, 2006. "Monetary policy committees and interest rate setting," European Economic Review, Elsevier, vol. 50(2), pages 487-507, February.
  7. Ellen E. Meade, 2010. "Federal Reserve Transcript Publication And Regional Representation," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 162-170, 04.
  8. Helge Berger & Jakob Haan, 2002. "Are small countries too powerful within the ECB?," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(3), pages 263-282, September.
  9. Timothy Besley & Jose G. Montalvo & Marta Reynal‐Querol, 2011. "Do Educated Leaders Matter?," Economic Journal, Royal Economic Society, vol. 121(554), pages F205-, 08.
  10. Axel Dreher & Michael J. Lamla & Sarah M. Rupprecht & Frank Somogyi, 2006. "The impact of political leaders’ profession and education on reforms," KOF Working papers 06-147, KOF Swiss Economic Institute, ETH Zurich.
  11. Bertrand, Marianne & Schoar, Antoinette, 2003. "Managing With Style: The Effect of Managers on Firm Policies," Working papers 4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  12. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-77, August.
  13. Gildea, John A, 1992. "The Regional Representation of Federal Reserve Bank Presidents," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 215-25, May.
  14. Janko Gorter & Jan Jacobs & Jakob de Haan, 2008. "Taylor Rules for the ECB using Expectations Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 473-488, 09.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  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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Cited by:
  1. Bernd Hayo & Guillaume Méon, 2012. "Why Countries Matter for Monetary Policy Decision-Making in the ESCB," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(1), pages 21-26, 04.
  2. Harald Badinger & Volker Nitsch, 2012. "Supranationalism in Monetary Policy Decision-Making," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(1), pages 27-31, 04.
  3. Jürgen Stark & Alexander Jung & Francesco Paolo Mongelli, 2012. "Normal Times versus Crisis Times," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(1), pages 03-09, 04.

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