Macroeconomic Policies of the Economic and Monetary Union: Theoretical Underpinnings and Challenges

Levy Economics Institute Working Paper No. 385

31 Pages Posted: 8 Nov 2003

See all articles by Philip Arestis

Philip Arestis

University of Cambridge - Department of Land Economy; Universidad del País Vasco (UPV/EHU)

Malcolm C. Sawyer

Levy Economics Institute

Date Written: July 2003

Abstract

This paper presents two issues: First, an effort to decipher the type of economic analysis and macroeconomic policies of the Economic and Monetary Union (EMU) theoretical and policy framework, which we suggest are essentially of the "new consensus" variety; Second, an argument that the challenges to the EMU macroeconomic policies lie in their potential to achieve full employment and low inflation in the euro area. We conclude that the institutional and policy arrangements surrounding the EMU and the euro are neither adequate for dealing with today's problems of unemployment and inflation nor promising for the future. We propose alternative policies, and institutional arrangements.

Keywords: macroeconomic policies, EMU, monetary policy, fiscal policy

JEL Classification: E50, E52, E60, E62

Suggested Citation

Arestis, Philip and Sawyer, Malcolm C., Macroeconomic Policies of the Economic and Monetary Union: Theoretical Underpinnings and Challenges (July 2003). Levy Economics Institute Working Paper No. 385. Available at SSRN: https://ssrn.com/abstract=439442 or http://dx.doi.org/10.2139/ssrn.439442

Philip Arestis (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

Universidad del País Vasco (UPV/EHU)

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

Malcolm C. Sawyer

Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

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