Economic policy space: a European perspective.

Summary The room for manoeuvre of cyclical regulation policies is a central issue of the Maastricht Treaty, whose economic policy options were confirmed by the Amsterdam Treaty in 1997, in particular the principles relating to budgetary discipline. In the framework of the monetary union, the pre-eminence of price stability is also recognized, to which all economic policy must contribute. The restrictive impact of the constraints on policy autonomy in the context of European monetary unification justifies a reflection on the room for manoeuvre. It begins by recognizing the elements involved in the definition of this concept, which is widely used in the Keynesian macroeconomic literature. The margin of manoeuvre is defined on the basis of the notions of diversity, efficiency and sustainability of policies, and is then confronted with the constraints likely to reduce it. These are mainly agents' expectations, the external constraint and monetary unification. The question of the credibility of the economic policy options adopted in the Community texts is raised by the macroeconomic interdependencies. The disappearance of the policy mix is likely to affect the stabilizing capacity of the budgetary authorities, the confidence of agents and the emergence of credible policies.