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Monetary Policy in EMU : a Voting-Power Analysis of Coalition Formation in the European Central Bank

Author

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  • Gabriel MANGANO

Abstract

On January 1st, 1999, the European Central Bank (ECB) has started operating a common monetary policy on behalf of the 11 founding members of the European Monetary Union (EMU). There is a legitimate concern about the practicalities and the effectiveness of the decision-making process inside the ECB. This paper addresses this concern by using standard measures of voting power (as well as some of their extensions) to quantify what is likely to be the relative influence of individual EMU members on common monetary-policy decisions. Postulating the a priori formation of certain voting coalitions, it shows, among others, that the 6-member Executive Board (EB) can claim, in certain circumstances, voting power of up to 66%, but policy impact of only up to 25%, i.e. respectively much more and much less than its number of votes would imply (6 out of 17, i.e. 35.3%). Also, it is not at all clear that the 6 countries which managed to elect one of their nationals at the EB have an interest in pressing the 6 EB members to vote along national rather than EMU-wide lines, or that EMU member countries with no representative at the EB are necessarily worse off (from a voting-power perspective) when each EB member focuses on his or her own country's developments, rather than on EMU-wide aggregates.

Suggested Citation

  • Gabriel MANGANO, 1999. "Monetary Policy in EMU : a Voting-Power Analysis of Coalition Formation in the European Central Bank," Cahiers de Recherches Economiques du Département d'économie 9908, Université de Lausanne, Faculté des HEC, Département d’économie.
  • Handle: RePEc:lau:crdeep:9908
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    Citations

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    Cited by:

    1. Ullrich, Katrin, 2004. "Decision-Making of the ECB: Reform and Voting Power," ZEW Discussion Papers 04-70, ZEW - Leibniz Centre for European Economic Research.
    2. Sousa, Pedro, 2009. "Do ECB Council Decisions represent always a Real Euro Consensus?," Working Papers 9/2009, Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE).
    3. 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.

    More about this item

    Keywords

    central banks; monetary policy; voting power; European Monetary Union;
    All these keywords.

    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
    • 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
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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