ABSTRACT
Macroeconomic policy, the legacy of Keynes, is concerned with the use of a range of policy instruments, such as fIscal, monetary and exchange rate policies. These impact upon output, unemployment, inflation and the balance of payments. As the process of integration evolves, countries are becoming increasingly interdependent and particularly dependent upon the German economy. To maintain successful macroeconomic outcomes, EC countries have consulted together and established policy coordination. They are moving towards more centralised decision-making competence which can produce overall macroeconomic outcomes superior to those achievable when each ~ountry conducts its own separate policy. However, this has involved modifying wholly nationally-determined preferences and moving closer to German preferences; it also assumes that countries are affected in the same way by major external changes and this is not always the case, as shown by German unifIcation.
