ABSTRACT
This chapter argues that the European Monetary Union (EMU) will make it more difficult for policymakers to commit to internationally agreed-upon policy adjustments. It presents an overview of the theoretical rationale and political reality of G7 policy co-operation and co-ordination and describes the German perspective on such co-operation. International macroeconomic policy co-operation has always been a major focus at G7 Summits as well as at meetings of finance ministers and central bank governors. The German position on international macroeconomic policy co-operation is characterised by a broad consensus among German economists as well as policymakers. Macroeconomic interdependence will continue to be addressed predominantly in informal ways, such as with regard to information exchange or mutual consultation. Policy co-ordination will take place only occasionally, in exceptional circumstances, and will likely remain focused on exchange-rate management. The chapter discusses the implications of the EMU with respect to policy making within the G7 framework.
