National Representation in Multinational Institutions: The Case of the European Central Bank

33 Pages Posted: 15 Sep 2011

See all articles by Harald Badinger

Harald Badinger

Vienna University of Economics and Business

Volker Nitsch

Darmstadt University of Technology - Department of Law and Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: September 15, 2011

Abstract

Multinational institutions face an important trade-off when hiring personnel. On the one hand, hiring decisions are based, as in most organizations, on a candidate’s professional qualifications. On the other hand, multinational institutions often aim for broad national representation. Reviewing evidence from the European Central Bank, we show that nationality is indeed relevant for both hiring and decision-making. Specifically, we identify various country-specific features that determine national representation in the top management of the ECB. Further, there is evidence for the existence of national networks between adjacent management layers. Finally, monetary policy decisions seem to be linked to national representation in the core business areas of the ECB. Examining a sample of 14 European countries over the period from 1999 to 2008, we estimate Taylor rules for alternative sets of euro area aggregates derived from different weighting schemes of national macroeconomic data. Our results indicate that weights based on national representation in the mid-level management of the ECB's core business areas best describe the central bank's interest-rate setting behavior.

Keywords: organization, central bank, nationality, monetary policy

JEL Classification: E020, E580, H830

Suggested Citation

Badinger, Harald and Nitsch, Volker, National Representation in Multinational Institutions: The Case of the European Central Bank (September 15, 2011). CESifo Working Paper Series No. 3573, Available at SSRN: https://ssrn.com/abstract=1927820

Harald Badinger

Vienna University of Economics and Business ( email )

Department of Economics
Althanstrasse 39-45
Vienna, 1090
Austria

Volker Nitsch (Contact Author)

Darmstadt University of Technology - Department of Law and Economics ( email )

Marktplatz 15
Residenzschloss
Darmstadt, 64283
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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