Voting in Emu - an Experimental Study of Institutional Innovation and the Role of Communication in the Stability and Growth Pact

20 Pages Posted: 31 Oct 2003

See all articles by Bernd Irlenbusch

Bernd Irlenbusch

London School of Economics & Political Science - Department of Management; IZA Institute of Labor Economics

Ulrike Leopold-Wildburger

University of Graz

Jorg Schutze

University of Graz

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Abstract

The Stability and Growth Pact (SGP) in the EU's economic and monetary union (EMU) aims to assure sound public finances in the EMU Member States by providing for sanctions against countries with excessive deficits. We experimentally examine the voting procedure of the SGP and find that the institutional rules are not at all satisfactory. As an institutional innovation, we test a procedure where fiscal sinners are excluded from voting, as suggested by Otmar Issing. It turns out that this modification is surprisingly successful. In addition, our study shows that the opportunity to communicate has a significant impact and tends to mitigate the Pact's shortcomings.

Suggested Citation

Irlenbusch, Bernd and Leopold-Wildburger, Ulrike and Schutze, Jorg and Sutter, Matthias, Voting in Emu - an Experimental Study of Institutional Innovation and the Role of Communication in the Stability and Growth Pact. Journal of Common Market Studies, Vol. 41, pp. 645-664, September 2003. Available at SSRN: https://ssrn.com/abstract=437280

Bernd Irlenbusch (Contact Author)

London School of Economics & Political Science - Department of Management ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 7955 7840 (Phone)
+44 (0)20 7955 6887 (Fax)

HOME PAGE: http://www.lse.ac.uk/collections/management/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ulrike Leopold-Wildburger

University of Graz ( email )

A-8010 Graz
Austria
+43 (316) 380 - 3492 (Phone)
+43 (316) 380 - 9560 (Fax)

Jorg Schutze

University of Graz

A-8010 Graz
Austria

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

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