Chapter 6: Some Reflections on the Macroeconomic Dimension of the Lisbon Agenda
6. Some reﬂections on the macroeconomic dimension of the Lisbon Agenda Pier Carlo Padoan The interactions between the Lisbon Agenda and the macroeconomic dimension are many and complex to say the least. In this chapter, I reﬂect on what are, in my view, the crucial points to address when discussing the issue. I will touch upon the following points: ﬁrst, the interaction between the macroeconomic environment and the Lisbon Agenda; second, institutional and operational modiﬁcations to strengthen the European Union (EU) macroeconomic framework; third, the Stability and Growth Pact (SGP) and the Lisbon Agenda; fourth, other policy instruments in support of the Lisbon Agenda; and ﬁfth, the external dimension. 6.1 THE MACROECONOMIC ENVIRONMENT AND THE LISBON AGENDA An appropriate macroeconomic environment is a necessary condition for the success of the Lisbon Agenda. But without a successful Lisbon Agenda, the European macroeconomic environment, and the euro area in particular, may face signiﬁcant risks. Greater Investment in Physical and Knowledge Capital Knowledge-based growth requires a stable macroeconomic environment. This is a generally accepted point in discussions of the relationship between macroeconomic policy and growth. Low and stable inﬂation provide a progrowth environment in the medium to long run. While some short-term costs to macroeconomic stabilization may materialize, they tend to be negligible. This common wisdom needs to be qualiﬁed, however. Growth driven by the Lisbon Agenda requires greater investment in physical and knowledge capital. Above all, the macro-environment must 102 Some reﬂections on the macroeconomic...
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