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European Monetary Policy and the ECB Rotation Model: Voting Power of the Core versus the Periphery

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  • Ansgar Belke
  • Barbara von Schnurbein

Abstract

We analyze the ECB Governing Council's voting procedures. The literature has by now discussed numerous aspects of the rotation model but does not account for many institutional aspects of the voting procedure of the GC. Using the randomization scheme based on the multilinear extension (MLE) of games, we try to close three of these gaps. First, we integrate specific preferences of national central bank presidents, i.e. their desired interest rates. Second, we address the agenda-setting power of the ECB president. Third, we do not simulate an average of the decisions but look at every relevant point in time separately.

Suggested Citation

  • Ansgar Belke & Barbara von Schnurbein, 2010. "European Monetary Policy and the ECB Rotation Model: Voting Power of the Core versus the Periphery," Discussion Papers of DIW Berlin 983, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp983
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    References listed on IDEAS

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    1. Gerling, Kerstin & Gruner, Hans Peter & Kiel, Alexandra & Schulte, Elisabeth, 2005. "Information acquisition and decision making in committees: A survey," European Journal of Political Economy, Elsevier, vol. 21(3), pages 563-597, September.
    2. Francesco Passarelli & Jason Barr, 2007. "Preferences, the Agenda Setter, and the Distribution of Power in the EU," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 28(1), pages 41-60, January.
    3. Ansgar Belke & Barbara Styczynska, 2006. "The Allocation of Power in the Enlarged ECB Governing Council: An Assessment of the ECB Rotation Model," Journal of Common Market Studies, Wiley Blackwell, vol. 44, pages 865-897, December.
    4. Owen, G & Shapley, L S, 1989. "Optimal Location of Candidates in Ideological Space," International Journal of Game Theory, Springer;Game Theory Society, vol. 18(3), pages 339-356.
    5. Carsten Hefeker, 2003. "Federal Monetary Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 643-659, December.
    6. Meade, Ellen E. & Sheets, D. Nathan, 2002. "Regional influences on U.S. monetary policy: some implications for Europe," LSE Research Online Documents on Economics 20091, London School of Economics and Political Science, LSE Library.
    7. 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 661-677, August.
    8. Ulrich Bindseil, 2001. "A Coalition-Form Analysis Of The “One Country - One Vote” Rule In The Governing Council Of The European Central Bank," International Economic Journal, Taylor & Francis Journals, vol. 15(1), pages 145-164.
    9. Ansgar Belke, 2003. "The rotation model is not sustainable," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 38(3), pages 119-124, May.
    10. Agnès Bénassy-Quéré & Edouard Turkisch, 2009. "The ECB Governing Council in an Enlarged Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 47, pages 25-53, January.
    11. Christian Fahrholz & Philipp Mohl, 2004. "EMU-enlargement and the Reshaping of Decision-making within the ECB Governing Council: A Voting-Power Analysis," Eastward Enlargement of the Euro-zone Working Papers wp23, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jun 2004.
    12. Gerlach, Stefan & Schnabel, Gert, 2000. "The Taylor rule and interest rates in the EMU area," Economics Letters, Elsevier, vol. 67(2), pages 165-171, May.
    13. Ellen E. Meade & Nathan Sheets, 2002. "Regional influences on U.S. monetary policy: some implications for Europe," International Finance Discussion Papers 721, Board of Governors of the Federal Reserve System (U.S.).
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    More about this item

    Keywords

    Euro area; European Central Bank; monetary policy; rotation; voting rights;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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