A postkeynesian scheme to coordinate monetary and fiscal policies in the euro area

The paper evaluates the existing arrangements of coordination between monetary and fiscal policies in the Euro area, makes an assessment of the literature on this topic and proposes an alternative scheme to improve them. The paper argues that there is a need for coordination between monetary and fiscal policies when both cyclical (short-run) and structural (long-run) problems are dealt with. Then it assesses how coordination is carried out under the existing institutional arrangements and draws from the existing literature which parts of them are in need of modification, proposing a new scheme, that regards both the institutional arrangements and the economic content of the Stability and Growth Pact, which aims at making them work effectively.