The political trilemma of the economic and monetary union

1 / 2018
Nicola Acocella
Paolo Pasimeni

The analysis of divergences and imbalances in the EMU suggests that failure to reduce inflation rate differentials in a monetary union may lead to increasing economic and political tensions and has indeed done so. However, it is also true that a top-down coordination of national policies for implementing structural policies in order to pursue that reduction would raise issues of democratic legitimacy. This epitomises the existential challenges that the EU faces nowadays.