EMU: Balancing Credibility and Legitimacy in the Policy Mix

The paper first discusses monetary policy, outlining the debates and the balance between the independence and accountability of the ECB, before turning to fiscal policy where the main mechanisms and institutions involved in the formation and enforcement of policy are analysed. The loose institutional structures allowing for coordination of employment policy are then discussed. The article finally explores the tensions between credibility and legitimacy before concluding that adequate attention must be paid to the legitimacy of policy so as to ensure an effective policy mix with an appropriate balance as between credibility and legitimacy.