| Towards a Balanced Policy Mix under EMU: Co-ordination of Macroeconomic Policies and 'Economic Government'? |
Ansgar Belke |
| University of Hohenheim |
| Copyright ©2002 Journal of Economic Integration |
| ABSTRACT |
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What kind of additional co-operation (-ordination) is necessary and feasible to cope with the new institutional set-up under EMU? Starting from the episode of the repo rate cut by the ECB in early 1999, it is asked what would have happened under a business as usual scenario. In this case, the pre-Maastricht pattern of fiscal policy would have quickly led to grave problems. A promising alternative monetary-fiscal policy mix in the first half of 1999 consisted of a restrictive fiscal policy and a monetary policy which had - within the bounds of price stability -some leeway to act counter-cyclically. |
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