The Conduct of Macroeconomic Policies in the Euro Area
With the adoption of the euro, the formal and material macroeconomic ‘constitution’ of the countries in the European Monetary Union (EMU) has changed considerably. The two major instruments used to regulate the economic cycle — namely, monetary and fiscal policy — were distributed differently among the various economic policy authorities of the EMU, thus creating an unprecedented asymmetry of powers and competences. Indeed, monetary policy is centralized and is left to an independent Central Bank, while fiscal policy remains decentralized and under the responsibility of the national authorities of the member states, though it carries an overall set of common rules.
KeywordsInterest Rate Monetary Policy Fiscal Policy Euro Area European Central Bank
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