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Unifying EU Representation at the IMF Executive Board

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Author Info

  • Brandner, Peter

    (Federal Ministry of Finance, Austria)

  • Grech, Harald

    (Oesterreichische Nationalbank)

  • Paterson, Iain

    (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

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    Abstract

    The consequences of consolidating EU representation at the IMF Executive Board by regrouping the 27 Member States into two EU constituencies, euro area and non-euro area, are discussed. In particular we contrast voting power as proposed by Penrose-Banzhaf (PBI) and Shapley-Shubik (SSI), and other respectively related measures of blocking (or veto) power and decision efficiency as proposed by Coleman and Paterson. Hitherto, IMF-specific literature is PBI-based. However, theoretical reasons and empirical plausibility arguments for the SSI are compelling. The (SSI) voting power of the two large constituencies – U.S.A. and euro area – reflects their corresponding voting shares over a range of majority thresholds, whereas PBI voting power reduces to only half of vote share at the majority threshold of 85% needed for some Executive Board decisions. SSI-related estimates of veto power are generally lower than the Coleman indices. Correspondingly, the efficiency of collective decision-making is considerably underestimated by the Coleman measure;

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    File URL: http://www.ihs.ac.at/publications/eco/es-245.pdf
    File Function: First version, 2009
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    Bibliographic Info

    Paper provided by Institute for Advanced Studies in its series Economics Series with number 245.

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    Length: 36 pages
    Date of creation: Nov 2009
    Date of revision:
    Handle: RePEc:ihs:ihsesp:245

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    Related research

    Keywords: International Monetary Fund; European Union; Voting power analysis; Veto power;

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