Macroeconomic Stabilization Policies: the European Perspective

The Great Recession brought the role of economic policy interventions for cyclical stabilization back to the forefront, a role long questioned by some schools of economic thought. Starting with the models proposed by various macroeconomic theories, this text analyzes the resulting economic policy recommendations regarding the main issues currently at the center of the economic debate: the output gap and unemployment, inflation and deflation, and the sustainability of public debt. Special attention is given to the most recent counter-cyclical policies of the European Monetary Union, with an examination of their modalities, constraints, and effects.