ABSTRACT
This chapter provides an overview of European macroeconomic governance looks at present. It introduces the broad framework for macroeconomic governance within the European Union (EU) as described in the 'Treaty on the European Union' and 'Treaty on the Functioning of the European Union'. The chapter explains how framework emerged out of challenges experienced in the 1990s and early 2000s. It surveys European efforts to reforge the macroeconomic governance framework in order to provide an adequate response to the economic and financial crisis. This chapter presents a preliminary assessment of the progress made. The role of macroeconomic policy instruments is to balance growth, lower unemployment, and maintain price stability. Fiscal policy coordination can ensure that governments do not actively undermine market conditions for one another or inadvertently shift responsibilities from one country to the next. The changes introduced by the European Central Bank (ECB) in its interpretation of price stability and to the overarching framework for the conduct of monetary policy.
