The Composition of Bank Councils for Heterogeneous Monetary Unions

  • Jürgen von Hagen
Part of the ZEI Studies in European Economics and Law book series (ZEIS, volume 1)


A principal task of a central bank constitution for monetary unions is to distribute the power over monetary policy between the center and the individual member states. The balance of power between the center and the states matters because, even in the absence of a central government, two different perspectives of monetary policy exist in a monetary union: One that takes union-wide aggregates of output, employment, and prices as the relevant targets of union monetary policy, and one that takes regional or national aggregates as targets and makes monetary policy actions dependent on regional or national idiosyncrasies and country-specific shocks. Furthermore, the balance matters because monetary policy makers from different regions may have different views regarding monetary policy as well as views that differ from those of the central administration. For examples, voting patterns of FOMC members (Chappell et al 1993, Havrilesky et al 1990, 1993) and members of the German Bundesbank Council (Lohmann, 1994; Vaubel, 1991) suggest that the views on optimal policy actions can differ widely between council members appointed by the federal government and those representing the district or state central banks, as well as among the district or state representatives.


Monetary Policy Central Bank Monetary Union Debt Ratio European Monetary Union 
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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Jürgen von Hagen
    • 1
    • 2
    • 3
  1. 1.ZEIUniversity of BonnGermany
  2. 2.Indiana UniversityUSA
  3. 3.CEPRLondonUK

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