The European Central Bank and the Economic Government of Europe

The European Central Bank has by and large applied the right monetary policy. Nevertheless, we argue for a range of reforms that would make the ECB more effective and accountable. We also suggest a role for the European Parliament in setting monetary policy targets. And with EU and Euro area enlargement around the corner, we propose reforms to the composition of the ECB's policymaking council. Finally, we make the case for a thorough revamp of the Stability and Growth Pact, which strangles Europe's economic growth.