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Macroeconomic co-ordination as an economic policy concept – opportunities and obstacles in the EMU

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  • Eckhard Hein

    (WSI in der Hans Boeckler Stiftung)

  • Achim Truger

    (WSI in der Hans Boeckler Stiftung)

Abstract

This paper traces the euro zone’s inadequate macroeconomic performance in recent years back to the predominance of a restrictive macroeconomic policy mix based on a ‘new monetarist’ approach to economic policy. An approach based on a (post-)Keynesian analysis is presented as a growth and employment-oriented alternative to this restrictive policy mix. Contrary to the strict assignment of macroeconomic goals to the macroeconomic policy actors and their instruments in the ‘new monetarist’ approach, the alternative requires the co-ordination of monetary, fiscal and wage policies in order to achieve growth, high employment and price stability. The paper examines the opportunities for and the obstacles to macroeconomic co-ordination given by the institutional framework of the European Monetary Union.

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0412007.

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Length: 35 pages
Date of creation: 10 Dec 2004
Date of revision:
Handle: RePEc:wpa:wuwpma:0412007

Note: Type of Document - pdf; pages: 35
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Web page: http://128.118.178.162

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Keywords: Macroeconomic policy co-ordination; European Monetary Union; monetary policy; fiscal policy; wages policy;

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References

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  1. Truger, Achim & Schulten, Thorsten & Hein, Eckhard, 2004. "Wage trends and deflation risks in Germany and Europe," WSI Discussion Papers 124, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  2. Stephen G. Cecchetti, 1999. "Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism," NBER Working Papers 7151, National Bureau of Economic Research, Inc.
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  9. Buti, M. & Eijffinger, S.C.W. & Franco, D., 2003. "Revisiting the Stability and Growth Pact: Grand Design or Internal Adjustment?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-176184, Tilburg University.
  10. Hein, Eckhard, 2002. "Monetary policy and wage bargaining in the EMU: Restrictive ECB policies, high unemployment, nominal wage restraint and rising inflation," WSI Discussion Papers 103, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  11. Robert Franzese, 2001. "Strategic Interactions of Monetary Policymakers and Wage/Price Bargainers: A Review with Implications for the European Common-Currency Area," Empirica, Springer, vol. 28(4), pages 457-486, December.
  12. Calmfors, Lars, 1998. "Macroeconomic Policy, Wage Setting and Employment - What Difference Does the EMU Make?," Seminar Papers 657, Stockholm University, Institute for International Economic Studies.
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  16. Eckhard Hein, 2005. "Die NAIRU – eine post-keynesianische Interpretation," Macroeconomics 0501009, EconWPA.
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  18. Bob HanckÈ & David Soskice, 2003. "Wage-Setting and Inflation Targets in EMU," Oxford Review of Economic Policy, Oxford University Press, vol. 19(1), pages 149-160.
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  20. Allsopp, Christopher & Vines, David, 1998. "The Assessment: Macroeconomic Policy after EMU," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 1-23, Autumn.
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  22. Otmar Issing, 2002. "On Macroeconomic Policy Co-ordination in EMU," Journal of Common Market Studies, Wiley Blackwell, vol. 40(2), pages 345-358, 06.
  23. Ilian Mihov, 2001. "Monetary policy implementation and transmission in the European Monetary Union," Economic Policy, CEPR & CES & MSH, vol. 16(33), pages 369-406, October.
  24. Alain Borghijs & Sjef Ederveen & Ruud de Mooij, 2003. "European Wage Coordination: Nightmare or dream to come true?," Economics Working Papers 020, European Network of Economic Policy Research Institutes.
  25. Eckhard Hein & Achim Truger, 2005. "What ever happened to Germany? Is the decline of the former european key currency country caused by structural sclerosis or by macroeconomic mismanagement?," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(1), pages 3-28.
  26. Jorg Bibow, 2001. "Making EMU Work: Some Lessons from the 1990s," Economics Working Paper Archive wp_326, Levy Economics Institute.
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  28. Eichengreen, Barry, 1998. "European Monetary Unification: A Tour d'Horizon," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 24-40, Autumn.
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Citations

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Cited by:
  1. Tangian, Andranik, 2008. "On the European readiness for flexicurity: Empirical evidence with OECD/HBS methodologies and reform proposals," WSI Discussion Papers 160, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  2. Tangian, Andranik, 2012. "Statistical test for the mathematical theory of democracy," WSI Discussion Papers 179, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  3. Eckhard Hein & Thorsten Schulten, 2004. "Unemployment, wages and collective bargaining in the European Union," Macroeconomics 0412006, EconWPA.
  4. Truger, Achim & Schulten, Thorsten & Hein, Eckhard, 2004. "Wage trends and deflation risks in Germany and Europe," WSI Discussion Papers 124, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  5. Paolo Biraschi, . "Searching for the optimal EMU fiscal rule:an ex-post analysis of the SGP reform proposals," Working Papers wp2008-7, Department of the Treasury, Ministry of the Economy and of Finance.
  6. Hein, Eckhard & Truger, Achim, 2010. "Finance-dominated capitalism in crisis: The case for a Global Keynesian New Deal," IPE Working Papers 06/2010, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  7. Eckhard Hein & Torsten Niechoj, 2005. "Leitlinien für ein dauerhaftes Wachstum in der EU? Konzept und Wirkung der Grundzüge der Wirtschaftspolitik," Macroeconomics 0501008, EconWPA.
  8. Tangian, Andranik & Seifert, Hartmut, 2006. "Globalization and deregulation : Does flexicurity protect atypically employed?," WSI Discussion Papers 143, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  9. Tangian, Andranik, 2007. "Flexibility-Flexicurity-Flexinsurance: Response to the European Commission's Green Paper "Modernising Labour Law to Meet the Challenges of the 21st Century"," WSI Discussion Papers 149, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  10. Seifert, Hartmut & Tangian, Andranik, 2007. "Flexicurity: Reconciling Social Security with Flexibility - Empirical Findings for Europe," WSI Discussion Papers 154, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.

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