A Common Election Day for Euro-Zone Member States?

Abstract

The primary objective of this paper is the empirical evaluation of the theoretical postulate by Sapir and Sekkat (1999) that the adoption of a single election day throughout the Economic and Monetary Union (EMU) of the European Union (EU) might be welfare improving. They find that the desirability of an electoral area (a common or synchronized election day) between two countries is enhanced when the spillovers between these countries are large and positive, and when they face symmetric shocks. With its asymmetric architecture of economic policy making, EMU is forced by EU law (EC treaty) to coordinate economic (primarily fiscal) policy between its politically independent member states in order not to foil the centralized monetary policy of the ECB. Economic policy coordination is exercised in EMU by a whole range of coordination processes and instruments, of which the Stability and Growth Pact (SGP) is the most prominent one in the field of fiscal policy. As a consequence of economic policy coordination we are already on the right track towards a “European business cycle”. However, as economic policy making (with the exception of monetary policy) is still a competence of the EMU member states, further areas of coordination are welcome. One area where EMU’s member states are still exerting uncoordinated influence (and hence, different shocks) on the economy is the different election dates.