Euro area unemployment : Prospects for macroeconomic policy action

Abstract

Recent political and institutional changes in the euro area have led to a polarised debate on the role of co-ordination of monetary and fiscal policies to improve the unemployment situation.This paper assesses of the scope for such co-ordination.The main finding is that monetary policy has a role to play in response to observed structural changes in labour markets.Nevertheless, the most important role is in supporting overall framework conditions for sustained growth, such as price stability. Key words: unemployment, macroeconomics, policy co-ordination