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Discussion Paper Details

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Title: On the Role of Conflicting National Interests in the ECB Council

Author(s): Hans Peter Gr�ner

Publication Date: July 1999

Keyword(s): Central Bank Council, EMU and Wage/Fiscal Discipline

Programme Area(s): International Macroeconomics and Public Economics

Abstract: This paper studies the strategic interaction of Euroland's national macroeconomic players and the ECB council under two alternative assumptions on central bank behavior: (i) all members of the ECB council are concerned about Euroland's macroeconomic aggregates and (ii) the ECB council is composed of national central bankers who are mainly concerned about domestic macroeconomic conditions. Under the former assumption monetary policy can be used to impose some discipline on national macroeconomic players at the cost of higher inflation. Under the predominance of national interests however, this trade-off can no longer be exploited. The persistence of national perspectives in the ECB council has an adverse impact on the relationship between key macroeconomic variables such a inflation and unemployment or inflation and the level of government debt.

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Bibliographic Reference

Gr�ner, H. 1999. 'On the Role of Conflicting National Interests in the ECB Council'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2192