Designing Fiscal and Monetary Institutions for a European Monetary Union

This paper explores the conditions under which aEuropean Monetary Union (EMU) is an optimum currencyarea. The scope for an EMU increases with theconvergence of structural and fiscal policies, smallmoney holdings, a conservative European Central Bank,and dependent national central banks. How nationalpolicies affect the rest of the union once the EMU hasbeen established is also investigated. The case forsurveillance of national structural and fiscalpolicies appears to depend mainly on the monetaryarrangements in the union.     

A European Public Choice perspective

Invited lecture in honor of Gordon Tullock at the meeting of The Public Choice Society in New Orleans, 15–17 March 1991.     

Southern European Public Bureaucracies in Comparative Perspective

The public bureaucracies of Greece, Italy, Portugal and Spain may be set apart from the rest of West European bureaucracies. Until the mid-1990s, the former were distinguished from the latter by certain interrelated structural characteristics. These characteristics were extended politicisation of the top administrative ranks; enduring patronage patterns in recruitment to the public sector; uneven distribution of human resources; formalism and legalism; and, with the exception of Spain, absence of a typical European administrative elite. The characteristics were related to the type of capitalism and political development in Southern Europe. South European bureaucracies have started evolving towards decentralisation and privatisation. However, convergence with the bureaucracies of other EU member-states is an open question.     

Campaign-Finance Reform: A Public Choice Perspective

The Federal Election Campaign Act as passed in 1971 and amended in 1974represented landmark federal legislation. It imposed new restrictions oncampaign contributions and contained path-breaking provisions for the useof public funds to partially finance the campaigns of qualifyingpresidential candidates. The nominal intent of the legislation was torestrain the skyrocketing campaign costs and the feared abuses thatgrowing dependencies on such money engendered. Three decades later, withthe campaign spending ``arms race'' still raging. Congress sought toimpose further constraints on campaign spending with enactment of theBipartisan Campaign Reform Act of 2002 (BCRA). Competing theories ofgovernment regulation are reviewed to better understand the intent andlikely consequences of the 2002 legislation in particular and campaignfinance regulation in general. A simple model of the campaign spendingprocess highlights the likely causes of the rapid growth in campaignspending. Data and evidence are presented to test hypotheses concerningthe timing of and underlying motivations for BCRA.     

An experimental analysis of voting in the Stability and Growth Pact in the European Monetary Union

The Stability and Growth Pact (SGP) in the European Monetary Union shall deter countries from running excessive deficits by the threat of punishment, executed conditional on the outcome of a multistage voting procedure. We examine voting behaviour in an experiment which closely resembles the SGP’s design and find that the SGP enables larger countries to block punishment more often than smaller countries. In addition, we study an institutional modification of the SGP by excluding countries with excessive deficits from voting on other ‘fiscal sinners’. Our findings clearly suggest that this innovation would give the SGP sharper teeth than it actually has in reality.     

The European Council and The Council of the European Union: Shapers of a European Confederation

The European Council and the Council of the European Union playkey roles in the European Union. The European Council is largelyconcerned with system-steering, while the Council of the EUundertakes sectoral policymaking. What is common to these rolesis the balancing act carried out by both institutions. Bothhave to mediate the centripetal dynamics of integration, termedcooperative confederalism here, and the centrifugal dynamicswhich are found in the strongly entrenched territorial natureof power, centered on the member states. Using new institutionalistanalysis, the article illuminates different facets of the twoinstitutions1 functioning in mediating the two dynamics.