2004 | nr 25 A New All-European Development Model in an Enlarged EU : Social and Economic Aspects | 106--123
European economic institutions
The paper deals with various aspects of the performance, especially from a macroeconomic point of view, expected from some of the most relevant European institutions (monetary and tax authorities, unions) vis-à-vis alternative ones. The role of the Stability and Growth Pact and some of the rules of the EMS 2 as a coordination device to eliminate possible negative spillovers from fiscal policies set at a national level is first considered and compared to explicit coordination of national budgetary policies. The priority given to price stability by the Maastricht Treaty and the statutes of the ECB is then discussed together with the questions of reputation, credibility and the relationship with fiscal policy and the labour market. A conservative central bank eliminates the temptation to inflate the economy in the attempt to reduce the real output gap and, therefore, eliminates the inflation bias, but is only a second-best solution for internalizing the externalities arising from un coordinated-wage bargaining. The paper then shows that abour market Vnstitutvons: V) ^rvoM be cousdereà together with other institutions when suggesting policy prescriptions; ii) should not be treated as institutions having a conduct passively dependent on economic policies, but in their possible cooperative role in policymaking. Some reflections on the 'model' adopted for shaping European institutions conclude the paper. (original abstract)
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