Macroeconomic Policies of the Economic Monetary Union

This paper presents two issues: first, an effort to decipher the theoretical and policy framework of the Economic and Monetary Union (EMU); and second, an argument that the challenges to the EMU’s macroeconomic policies lie in their potential to achieve full employment and low inflation in the euro area. We conclude that the institutional and policy arrangements surrounding the EMU and the euro are neither adequate for dealing with today’s problems of unemployment and inflation nor promising for the future. We propose alternative policies, and institutional arrangements.