Roland Vaubel

A public choice approach to international organization

ConclusionThe purpose of this paper has been to develop a positive theory of international organization which can supplement the conventional normative theory used as a positive theory.The conventional approach draws much of its plausibility from the fact that it relies on the reasons given by the decision-makers and reported in the media, and on the lofty objections stated in the charters of international agencies. The public-choice approach, by its very nature, is precluded from accepting such evidence. In some respects, it must appear dismal and perhaps cynical.It is a positive theory which tries to explain. But just as the conventional normative theory tends also to be used as a positive theory, our positive theory is likely to have normative implications as well.It does not imply that international organization is generally undesirable. But it can be used to emphasize the advantages of decentralized policy making and to warn against a naive internationalism which welcomes international agreements for their own sake — regardless of what is being agreed upon. International organization can be and is abused, and the cause is not an occasional lack of virtue among politicians but a systematic built-in tendency toward collusion at the expense of the citizens. Such collusion is not only undesirable in itself. There is also the danger that it discredits and crowds out unambiguously desirable forms of international cooperation: agreements to remove non-market obstacles to market interdependence in the field of international trade and capital movements.

The bureaucratic and partisan behavior of independent central banks: German and international evidence

Abstract Central bank staff depends positively on the countrys population size, its per capita income and the central banks independence with respect to salaries. In the developing countries, exchange rate pegging can reduce central bank staff. Among the industrial countries, France, Belgium/Luxembourg and Germany have the most overstaffed central banks. In Germany, central bank revenue has a significantly positive effect on staff size. A non-parametric test for the German Bundesbank confirms the hypothesis that monetary expansion (M1) accelerates when the government has a political majority in the central bank council at the beginning of the pre-election period or when the political majority in the council changes in favor of the government during the pre-election period (and that monetary expansion decelerates if the reverse is true).

The Educational and Professional Background of Central Bankers and its Effect on Inflation - An Empirical Analysis

We assume that central banks can control inflation so that inflation rates reflect the preferences of the central bank council.The hypothesis to be tested is that these preferences depend on the central bankers? educational and/or professional background. In a panel data analysis for the euro area and eleven countries since 1973,we explain inflation first by the weights which the various educational and professional characteristics occupy in the central bank council and second by the education or profession of the median central bank council member. Our results indicate that, with regard to professional background, former members of the central bank staff as well as former bankers and businessmen have the strongest inflation aversion and that former trade unionists and politicians seem to have the highest inflation preference.As for the education of the council members, our results are less robust. However, if the median member of the central bank council has studied business, the inflation rate is significantly lower than if she has studied economics.

Real exchange-rate changes in the European community: The empirical evidence and its implications for European currency unification

ZusammenfassungReale Wechselkursänderungen in der Europäischen Gemeinschaft: Der empirische Befund und seine Bedeutung für die Europäische Währungsvereinigung. — In diesem Beitrag wird-anders als von der Theorie des optimalen Währungsgebiets-ein umfassendes Kriterium für die ökonomische Wünschbarkeit einer Währungsvereinigung vorgeschlagen, das der empirischen Verifizierung zugänglich ist: der Bedarf an realen Wechselkursänderungen zwischen den potentiellen Mitgliedern der Währungsunion. Die Europäische Gemeinschaft wird im folgenden an diesem Mabstab gemessen. Dabei zeigt sich, daβ die Europäische Gemeinschaft mit einiger Wahrscheinlichkeit ein weniger geeignetes Währungsgebiet ist als die Bundesrepublik Deutschland, Italien oder die USA.Ein Vergleich der realen und der nominalen Wechselkursänderungen zwischen den neun Mitgliedsländern beweist jedoch, daβ die erheblichen (nominalen) Wechselkursänderungen der letzten fünf Jahre überwiegend auf mangelnde Koordination der nationalen Geldpolitiken und nur in geringem Maβe auf strukturelle Divergenzen (reale Wechselkursänderungen) zurückzuführen sind. Eine Gegenüberstellung der durchschnittlichen innergemeinschaftlichen realen Wechselkursänderungen in den Jahren 1967–1970 und 1971–1975 ergibt, daβ die Bereitschaft zur wirtschafts-politischen Koordination sogar im Zeitverlauf nachgelassen hat; der Fehlschlag der Bemühungen um eine europäische Währungsunion kann nicht durch ungünstige wirtschaftliche Ereignisse (einen verstärkten Bedarf an realen Wechselkursänderungen) erklärt werden.Der Versuch, dem Ziel der europäischen Währungsunion durch wirtschafts-politische Koordinierungsbemühungen näher zu kommen, ist — so lautet die abschlieβende These — wahrscheinlich aus grundsätzlichen ökonomischen Erwägungen zum Scheitern verurteilt; erfolgversprechend erscheint aus ökonomischer Sicht nur eine Strategie der Zentralisierung.RésuméLes variations des taux de change réels dans la Communauté Européenne: L’analyse empirique et ses conséquences pour l’unification monétaire européenne.Contrairement à la théorie de la zone monétaire optimale, l’auteur propose un critère de la souhaitabilité de l’unification monétaire qui est en mÊme temps compréhensif et sujetible à la vérification empirique: le besoin de variations des taux de change réels parmi les membres potentiels de l’union monétaire. En suite, cette norme est appliquée à la Communauté Européenne. Il se montre que la Communauté est probablement une zone monétaire moins appropriée que la R.F.A., l’Italie ou les Etats Unis.Une comparaison des variations des taux de change réels et nominels parmi les neuf pays membres prouve que, cependant, les variations considérables des taux nominels pendant 1970–1975 étaient dues principalement au défaut d’une coordination des politiques monétaires et assez peu à des divergences structurelles (c.à.d., à des variations des taux de change réels). En fait, si l’on compare les variations intra-communautaires moyennes des taux de change réels en 1967–1970 et 1971–1975, il se montre que l’échec du projet de l’union monétaire ne s’explique pas par des événements-économiques défavorables (c.à.d., par un besoin plus fort de variations des taux de change réels), mais par un relâchement de la volonté coordinatrice.Selon la thèse finale, il y a des raisons d’ordre économique qui indiquent que probablement chaque essai d’approcher le but de l’union monétaire par une stratégie coordinatrice est a priori condamné à l’échec; du point de vue économique seulement une stratégie de centralisation promet du succès.ResumenVariaciones reales de los tipos de cambio en la CEE: Los resultados empíricos y su importancia para la union monetaria europea. — En este trabajo se establece — a diferencia de la teoria de las zonas monetarias óptimas — un criterio general para la deseabilidad económica de una union monetaria, que es posible ser verificado empfricamente: la necesidad de variaciones en la tasa de cambio real entre miembros potenciales de una union monetaria. La CEE se analiza más adelante bajo este criterio. El resultado del análisis fue que la CEE es con alguna probabilidad una zona monetaria menos adecuada que Alemania Federal, Italia o los EEUU.Una comparación de las variaciones reales y nominales de las tasas de cambio entre los nueve estados miembros de la CEE demuestra, sin embargo, que las variaciones (nominales) sustanciales en las tasas de cambio de los Últimos cinco años se debieron preponderantemente a falta de coordinación en las politicas monetarias nacionales y en menor medida a divergencias estructurales (variaciones en la tasa de cambio real). Una comparación de las variaciones promedio en las tasas de cambio reales dentro de la Comunidad en los años 1967–1970 y 1971–1975 muestra, que la predisposición para coordinar politicas económicas ha disminuido a traves del tiempo; el fracaso de los intentos por formar una union monetaria no se puede explicar por medio de hechos económicos desfavorables (una mayor necesidad de variaciones cambiarias reales).El intento de acercarse a la meta de una union monetaria europea a traves de empeños en la coordinación de politicas económicas está — así dice la tesis final — probablemente condenado a fracasar debido a consideraciones económicas básicas; una estrategia de centralización parece ser desde el punto de vista económico la Única que promete éxitos.

The public choice analysis of European integration: A survey

Abstract The public choice analysis of European integration focusses on three issues: (1) the interests and the decision rules of the main actors, (2) the institutional dynamics of integration, (3) the explanation of the differential impact of political integration in particular policy fields. Theory and evidence on the behavior of EC voters, the Council of Ministers, the EC Commission, the European Parliament, the European Court of Justice and European interest groups are surveyed and analyzed from a public choice perspective. The decision-making process is shown to be biased in favour of centralisation.

Real exchange-rate changes in the European community: A new approach to the determination of optimum currency areas

Abstract Deviations from relative purchasing power parity (real exchange-rate changes) are suggested as a comprehensive and operational criterion of the desirability of currency unification. Using consumer price indices, the criterion is applied to the European Community in 1959–1976 and in various subperiods. It is shown, inter alia, that the Community is probably a less desirable currency area than comparable existing currency unions like Germany, Italy and the U.S., that its failure to implement its 1971 plans for monetary union can hardly be attributed to unusually unfavourable external disturbances and that it is possible to identify the member countries which are the most suitable candidates for a pioneer venture in currency unification.

The Political economy of international organizations : a public choice approach

Part 1 The public choice approach to international economic issues and organizations - theory: the public choice approach to international political economy, Bruno Frey a public choice approach to international organization, Roland Vaubel canons of public choice analysis of international agreements, Rodney Smith international organizations from the constitutional point of view, B. Frey and Beat Gygi approaches to the study of international organizations - major paradigms in economics and political science, Patricia Dillon et al international institutions and the market for information, Michele Fratianni and John Pattison. Part 2 Applications: the GATT as an international discipline over trade restrictions - a public choice approach, Michael J. Finger a public choice perspective of the International Energy Programme, R. Smith United States policy and the Law of the Sea Conference, 1969-82 - a case study of multilateral negotiations, Ross Eckert the political economy of the International Monetary Fund - a public choice analysis, R. Vaubel determinants of foreign aid under alternative institutional arrangements, Friedrich Schneider and Hannelore Weck-Hannemann unanimous decisions in a redistributive context - the Council of Ministers of the European Communities, William S. Peirce the common agricultural policy of the European Community - a public choice interpretation, Tim Josling and H.Wayne Moyer a public choice view of the Delors Report, R. Vaubel.

Staff Growth in International Organizations: A Principal-Agent Problem? An Empirical Analysis

The analysis covers 27 international organizations in the years 1950-2001. From the first to the last year, staff increased at a compound average rate of 3.2 percent per annum. Since the number of member states rose by only 2.5 percent, the elasticity of staff to member states is larger than one (e 1 = 1.28). As this may be due to an expansion of tasks, we estimate time-series regressions and panel-data regressions which contain output proxies or task dummies wherever possible. The pooled analysis of 817 observations reveals that (i) the elasticity of staff to membership is much larger than unity (1.36) if, and only if, the non-stationary component of staff size is not removed, (ii) United Nations organizations have significantly more staff, (iii) international organizations in the United States and Switzerland have significantly less staff, (iv) heterogeneity in terms of per capita income limits the size of an international organization and that (v) its staff is larger if its membership comprises many industrial or communist countries. In a reduced sample, the financing share of the largest contributor in combination with the party or programmatic orientation of its government has a significantly negative effect on staff because the size of the largest financing share determines the incentive to monitor. U.S. exit from an international organization reduces its staff significantly. Most of these results depend on the condition that the nonstationary component of staff size is not taken account of by time dummies or trends.

Constitutional safeguards against centralization in federal states: An international cross-section analysis

This paper contains an international cross-section analysis of the share of central government expenditure in total government expenditure for a sample of about 50 countries and a subsample of 23 industrial countries in 1989–91. The expenditure shares, their changes and the unexplained residuals for each country are reported in Table 1. As the analysis demonstrates, the share of central government is significantly lower, if income per capita and the countrys area are large and if it is a federal state. The explanatory power of the equation rises considerably if the binary dummy for federalism is replaced by quantitative constitutional variables. The most powerful single explanatory variable is the age of the constitutional court in the complete sample or the constitutional courts independence of union institutions in the sample of industrial countries. The equations explanatory power (adjusted for degrees of freedom) can be raised by allowing also for the degree of control which provincial institutions have over the constitution and over the second chamber and by taking into account whether an increase in federal tax rates requires a popular referendum. Other types of constitutional referenda and the relative age of the federal constitution do not seem to matter. Among the federal states, the share of central government is much larger than predicted in the United States and Mexico, and it is much smaller than predicted in Argentina and Canada. The constitutional variables are particularly helpful in explaining the relatively small share of central government in Switzerland, Malaysia, Germany and Austria. The last section draws conclusions for the design of constitutions with some special applications to the European Union.

Coordination or Competition among National Macro-economic Policies?

One of the most remarkable and perhaps surprising developments of the last few years is the increasing tendency towards international coordination of national stabilisation policies. It is a surprising phenomenon because it occurs at a time of considerable exchange-rate flexibility.