A Common Election Day for the Euro Zone?

14 Pages Posted: 18 Jan 2008

See all articles by Fritz Breuss

Fritz Breuss

Vienna University of Economics and Bus. Admin., Europe Institute

Abstract

This paper tests for the Euro zone the hypothesis put forward by Sapir and Sekkat (1999) that synchronizing elections might improve welfare. Implementing political business cycle features into a politico-macroeconomic model of the Euro zone allows us to simulate the effects of adopting a common election day in the 12 Euro zone member states. The results support most of the theoretical predictions by Sapir-Sekkat: (i) Synchronizing the elections could enhance GDP growth, reduce unemployment, but leads to increased inflation and in some countries to a deterioration of the budget - higher inflation could force the ECB to monetary restrictions. (ii) If the synchronization happens asymmetrically either only in the large or only in the small Euro zone countries the result depends on the size of the spillovers. (iii) As anticipated in Sapir-Sekkat a common election day is a further step towards the desired European business cycle, however, at the cost of increasing its amplitude. Harmonizing elections is another method of policy coordination. Whether this leads to higher welfare is a matter of weighting the different macroeconomic outcomes and it also depends on the model applied.

Suggested Citation

Breuss, Fritz, A Common Election Day for the Euro Zone?. Kyklos, Vol. 61, Issue 1, pp. 19-32, February 2008, Available at SSRN: https://ssrn.com/abstract=1084216 or http://dx.doi.org/10.1111/j.1467-6435.2008.00390.x

Fritz Breuss (Contact Author)

Vienna University of Economics and Bus. Admin., Europe Institute ( email )

Althanstrasse 39-45
1090 Vienna
Austria

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