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Central Bank Constitutions for Monetary Unions

Author

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  • Süppel, Ralph
  • von Hagen, Jürgen

Abstract

Historical experience suggests that the distribution of monetary policy authority among the members of a monetary union is a key aspect of the design of a central bank constitution. We analyse alternative institutional solutions to that problem with different degrees of centralization of monetary policy decisions. The degree of centralization required to facilitate credible, low-inflation policies depends critically on the political structure of the monetary union. Efficient monetary stabilization requires centralized decision-making rules. Whether or not stabilization can be improved by adding central appointees to member state representatives on the central bank council depends on the stochastic structure of the relevant economic disturbances.

Suggested Citation

  • Süppel, Ralph & von Hagen, Jürgen, 1994. "Central Bank Constitutions for Monetary Unions," CEPR Discussion Papers 919, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:919
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    More about this item

    Keywords

    Central Banks; Monetary Policy; Monetary Union;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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