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

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 coordination 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.