Do euro area institutions benefit the small member states?

Abstract

In recent years, the pooling of authority among the member states of the euro area has intensified, expanding the remit of the Council, Commission and ECB. While it is commonly thought that large states dominate these institutions, a growing literature emphasizes the ability of small states to pursue their interests too. We explore whether the empowerment of euro area institutions was associated with relative net gains for small member states over large ones, and with relative losses during the euro crisis. We estimate the relationship between the relative amount of resources of different institutions, and the distribution of gains among members, throughout 1999-2016. We find that empowering the Council, the Commission or the ECB provides relative gains to small member states, although not against Germany.

The Greatest of the Small? The Netherlands, the New Hanseatic League and the Frugal Four

“…The four and five presidents' reports, the ESM as well as the 2017 Commission Report on the Deepening of EMU have made small EU member states realise that the euro area crisis is providing a trigger for possible deepening of European integration in particular in the area of economic and monetary integration Juncker 2015. Although there is no single 'small state' in the EU, many of these member states are facing domestic backlashes that have reduced their window of opportunity to jump on the bandwagon of deeper integration (see Verdun 2013;Sadeh, Rubinson, and Raskin 2021).…”