Since the introduction of the Single Market in 1992, euro area and EU countries have undertaken important reforms regarding the functioning of the capital, labour and product markets. Nevertheless, substantial impediments remain to be removed in order to guarantee more flexibility on these markets.
For a long time, stronger forms of international policy coordination were deemed unnecessary: many theoretical and empirical analyses in the 1980s converged to show that any gains from such macroeconomic coordination were likely to be of modest size. However, we may now need to revisit that fairly sceptical conclusion.