Europe, Globalization and the Lisbon Agenda
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Europe, Globalization and the Lisbon Agenda

Edited by Maria João Rodrigues

The Lisbon Agenda aims to prepare Europe for globalization by updating European policies for research, innovation, competition, trade, employment, education, social protection, environment and energy at both the European and national levels. Designed to inspire the new cycle of the Lisbon Agenda until 2010 and beyond, this timely and significant volume explores the intellectual elaboration of the agenda for the coming years.
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Chapter 6: Some Reflections on the Macroeconomic Dimension of the Lisbon Agenda

Pier Carlo Padoan


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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