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Fiscal responsibility and monetary activism is the right macroeconomic mix for our over-indebted economy.
"Theory and evidence suggest that tight fiscal policy and loose monetary policy is the right macroeconomic mix to help rebalance an economy in the state I've just described.
To change this, Europe's policymakers need to do two things: find a better macroeconomic mix; and start moving towards joint liability for both sovereign bonds and big banks.The misguidedness of today's austerity obsession is clearest in Spain (see article).
And amid a fresh slump even deeper than that of the 1980s, the Thatcherite macroeconomic mix – namely, putting lower inflation first, and considering unemployment only second – is rejected, by a 41%to33%3% margin.
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Unlike Europe's, America's macroeconomic policy mix has just moved decisively away from austerity.
Germans will have to learn to tolerate slightly higher inflation at home if the zone's overall inflation is to be kept at the appropriate level while peripheral economies adjust.A euro zone needs a Eurobond, of some sortA more balanced macroeconomic policy mix could help to put the euro zone back on the path to growth.
The government's preferred macroeconomic policy mix since 2010 has been "tight fiscal policy and easy money", in the next few years fiscal policy looks set to remain tight (as deficit reduction continues) but monetary policy will be less easy.
The European Employment Pact combines the macroeconomic policy mix, the coordinated employment strategy of the Luxembourg process and the economic reforms of the Cardiff process into a economic policy triad.
The task of creating the conditions for more employment and growth, which is primarily a matter for Member States, must be based on a European strategy of structural reforms and a balanced macroeconomic policy mix.
The purpose of the European Employment Pact is to ensure that these levels work together in a consistent manner so as to boost employment while maintaining stability and to link together a cooperative macroeconomic policy mix, including a macroeconomic dialogue (Cologne process), the coordinated employment strategy and economic reforms (Luxembourg and Cardiff processes).
Thus it is necessary to set in place on a permanent basis conditions for a macroeconomic policy mix tailored to growth and employment while maintaining price stability and, at the same time, to promote innovation and productivity by carrying out structural reforms on the markets for goods, services and labour.
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