The Challenge of the Early Years
Edited by Marco Buti and André Sapir
Chapter 8: Economic Policy Coordination in EMU: Accomplishments and Challenges
8. Economic policy coordination in EMU: accomplishments and challenges Servaas Deroose and Sven Langedijk 1. INTRODUCTION Since the inception of economic integration in Europe in the late 1950s, economists and policy makers alike have been confronted with the issue of economic policy coordination. During the course of the past decades, increased economic integration and economic linkages between the Member States of the European Union have intensiﬁed their interdependence. Widening and deepening the scope of economic policy coordination has been the gradual and natural response to the increased interlinkages. In the course of the complex history of the EU, various forms of economic policy coordination have been undertaken and deep-seated diﬀerences between Member States’ views on the appropriate economic policies, notably in the face of economic shocks, have often led to tensions and diverging policy reactions which in turn impeded economic performance. It was not until the early 1990s, when the Community ﬁnally agreed on the creation of the Economic and Monetary Union (EMU), that policy coordination moved into higher gear. With the launch of the euro on 1 January 1999, a new framework for economic policy has come into force among the members of the single currency. The institutional architecture which the Maastricht and Amsterdam Treaties bestowed on EMU is unprecedented. Its uniqueness resides in the fact that a single monetary policy is entrusted to an independent, supranational central bank, and decentralized economic policies in the hands of national actors but subject to some common rules. To ensure...
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