Macroeconomic Policies for Full Employment and Low Inflation

Philip Arestis and Malcolm Sawyer ()

Chapter 7 in Economic and Monetary Union Macroeconomic Policies, 2013, pp 144-167 from Palgrave Macmillan

Abstract: Abstract What should the macroeconomic policies of the Economic and Monetary Union (EMU) look like? In trying to give an answer to this question we proceed in three stages. The first, which picks up from our discussion in chapters 4 and 5, is to consider what the objectives of economic policy should be, specifically in relation to macroeconomic policy. The second is to consider the instruments of economic policy and how they can be used to achieve the stated objectives. In this we look at the instruments of monetary policy and argue that monetary policy should be geared towards ensuring financial stability (rather than being narrowly focused on inflation) and that additional tools of monetary policy should be developed to move away from sole reliance on the central bank interest rate policy. In the case of fiscal policy we argue for such a policy that is geared towards achieving a high level of economy activity and low unemployment. For national governments this would entail setting the budget position in an appropriate manner without constraint from the Stability and Growth Pact and similar measures. At the federal level there is a need to develop a budget of some significance and one which can play a stabilising role. This can raise questions such as whether this would be a budget covering just the EMU countries or whether it should be extended to all EU countries.

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Central Bank; Fiscal Policy (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-31789-6_7

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137317896

DOI: 10.1057/9781137317896_7

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().