Co-ordinating Stability: Some Remarks on the Roles of Monetary and Fiscal Policy under EMU

  • Bernhard Winkler


Only a few months into Stage Three of Economic and Monetary Union in Europe (EMU) the issue of policy co-ordination looms large both on the agenda of European policy makers and in the academic debate. Calls for enhanced policy co-ordination have long been a routine ingredient of Sunday speeches and summit declarations. One possible reason why the notion of co-ordination has proved attractive is the vagueness of the concept as used in the policy context. A second reason is that the term co-ordination usually carries a positive connotation. This is also a legacy of the academic literature, where — at least for the simple two player models used initially — co-ordination is “always good”, i.e. welfare improving, almost by definition. Both features, a lack of clarity of what is meant by co-ordination paired with an unreflected “pro co-ordination bias” are also present in the current European debate.


Monetary Policy Central Bank Fiscal Policy Price Stability Central Bank Independence 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Artis, M. and Winkler, B. (1998) `The Stability Pact: Safeguarding the Credibility of the European Central Bank’, National Institute Economic Review, January, 87–98.Google Scholar
  2. Beetsma, R. and Bovenberg, L. (1998) `Monetary Union Without Fiscal Coordination May Discipline Policymakers’, Journal of International Economics 45, 239–258.CrossRefGoogle Scholar
  3. Beetsma, R. and Uhlig, H. (1999) `An Analysis of the Stability Pact’, Economic Journal, forthcoming.Google Scholar
  4. Canzoneri, M. and Diba, B.T. (1996) `Fiscal Constraints on Central Bank Independence and Price Stability’, CEPR Discussion Paper 1463.Google Scholar
  5. Eichengreen, B. (1997) `Saving Europe’s Automatic Stabilisers’, National Institute Economic Review 159 (1/97), 92–98.CrossRefGoogle Scholar
  6. Jensen, H. (1996) `The Advantage of International Fiscal Cooperation under Alternative Monetary Regimes’, European Journal of Political Economy 12, 485–504.CrossRefGoogle Scholar
  7. Kreps, D. (1990) `Corporate Culture and Economic Theory’, in J.E. Alt and K.A. Shepsle (eds.), Perspectives on Positive Political Economy, MIT Press: Cambridge, Mass., 258–281.Google Scholar
  8. Milgrom, P. and J. Roberts (1992) Economics, Organization and Management, Harvester Wheatsheaf: Hemel Hampstead.Google Scholar
  9. Rogoff, K. (19856) `Can International Monetary Policy Coordination be Counterproductive?’, Journal of International Economics 18, 199–217.Google Scholar
  10. Padoa-Schioppa, T. (1999) `Europe’s New Economic Policy Constitution’, in Will EMU Lead to a European Economic Government?, Centre for European Reform, London, 15–28.Google Scholar
  11. Sargent, T. and Wallace, N. (1981) `Some Unpleasant Monetarist Arithmetic’, Quarterly Review, Federal Reserve Bank of Minneapolis (Fall), 1–17.Google Scholar
  12. Winkler, B. (1996) `Towards a Strategic View on EMU: A Critical Survey’, Journal of Public Policy 16, 1–28.CrossRefGoogle Scholar
  13. Winkler, B. (1998) `The Political Economy of European Monetary Union: Between Economic Logic and Political Imperatives’, in A. Cafruny and P. Peters (eds.), The Union and the World, Kluwer: Dordrecht, 191–208.Google Scholar
  14. Woodford, M. (1996) `Control of the Public Debt: a Prerequisite for Price Stability?’, NBER Working Paper 5684.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2001

Authors and Affiliations

  • Bernhard Winkler
    • 1
  1. 1.DG ResearchEuropean Central BankFrankfurtGermany

Personalised recommendations