Business Briefs

Macroeconomic Policy Coordination in the EU

The European Economic and Monetary Union (EMU) has long been confronted by the problem that monetary union – in the form of the euro – has become a reality faster than broader economic union. While all eurozone members share a currency, their economic circumstances still greatly differ. Furthermore, the European Union’s (EU) mechanisms for managing these differences through macroeconomic coordination have tended to be weak and ineffective. To skeptics – some of whom have made the same case for decades – the sum product of EMU is a community of economically disunited and divergent countries sharing a single monetary policy that straitjackets economies into maladaptive policies.

While the EU has not been completely blind to such negative outcomes, its attempts to mitigate the dangers of economic divergence have been historically unsuccessful. This brief will succinctly outline previous attempts at macroeconomic coordination before discussing the three recent initiatives that emerged during the present eurozone crisis: the December 2011 “six-pack,” the Treaty on Stability, Coordination and Governance (TSCG, which includes the fiscal compact), and the “two-pack” of additional proposals still under discussion.

  • Maastricht and the Stability and Growth Pact
  • The Six-Pack
  • The Fiscal Compact
  • The Two-Pack
  • An Unreceptive Public?


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