ABSTRACT
This chapter explains why— despite predominant control of government by the Socialists— France pursued a policy that sacrificed employment for price stability. It analyzes the constraints within which French governments operated in the domain of macroeconomic policy, the choices they made in that domain in the face of those constraints, and the consequences of those choices. Domestic macroeconomic policy and international economic policy are often regarded as two separate and distinct domains of policy. As the French economy has become increasingly dependent on trade - especially on trade within the European Community - domestic macroeconomic policy has become increasingly intertwined with, and dependent upon, international economic policy, and vice versa. Proposed as a remedy for the several defects of the "snake" that had existed since 1972, the European Monetary System was designed to create a "zone of monetary stability" in Europe.
