Fiscal and Monetary Policy in the Eurozone

Following the 2008 financial crisis, the Eurozone faced a major challenge to many of its most widely held beliefs around both short- and long-term economic policy. Contrary to what had been the received wisdom, it suddenly became clear that financial institutions can fail, that low interest rates are often unable to stimulate the economy, that the unemployment gap is still very large, and that external and internal imbalances are becoming more entrenched. Such sudden revelations left economists grasping for answers. 
Rosaria Rita Canale and Rajmund Mirdala outline the economic orthodoxies that led to such massive blind spots, and they shed light on the emerging paradigms that continue to struggle to offer convincing frameworks that address what happened and what to do next. They show how dominant economic theories led to a progressive devaluing of the idea that coordinated economic policy offers an effective way of maintaining macroeconomic equilibrium, and they illustrate how the new economic environment calls for a new role for economic policy, one that allows for a more maneuverable monetary policy and a more active fiscal policy. What they ultimately suggest is that this renewed framework of cooperation among policy instruments would require a general rethinking of the political equilibria within the Eurozone, as a stable economic environment cannot be maintained at the expense of particular countries. 
For its systematic analyses of the economic policy framework of the Eurozone, and for the rigor of its critiques of current ideas about how to move forward, Fiscal and Monetary Policy in the Eurozone is essential reading for postgraduate students of economics, and it is of keen interest to researchers, policymakers, journalists, and financial strategists.

“Canale and Mirdala cast a fresh light on the institutional structure that regulates economic policy in the European Monetary Union. From different countries and with different personal experiences of the Eurozone institutional consolidation process, nevertheless they agree that it is necessary to make explicit the connection between the evolution of economic theory and the path of construction of the European Monetary Union. They look at the Eurozone in terms of the policy framework, fiscal policy, monetary policy, and policy coordination.”

-- Annotation ©2019 (protoview.com)

Rosaria Rita Canale is Associate Professor of Economic Policy at the Parthenope University of Naples. Rajmund Mirdala is Associate Professor and Head of the Department of Economics at the Technical University of Kosice, Slovakia.

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