The assessment: macroeconomic policy after EMU

In this paper we discuss the emergence of the new European macroeconomic structure within EMU. We focus on three important elements: the wage-fixing authorities in each country, the fiscal authorities in each country, and the single European Central Bank (ECB). We identify serious problems which might arise in coordinating both the wage-setters and the fiscal authorities, and argue that these problems could be exacerbated if the ECB conducts monetary policy inappropriately. In the light of this we provide recommendations for the conduct of monetary policy by the ECB. The paper also briefly discusses financial stability issues and the interaction between the countries in EMU and the rest of the world.