This book is neither just another macroeconomics textbook nor a general guide to the EU. It is a modern manual that analyzes the intersection of fiscal and monetary policy within monetary unions, with a central case study on the Economic and Monetary Union (EMU), answering the most topical question of the eurozone — how does a monetary union manage the differing fiscal policies of its members when debts in several countries exceed 100% of GDP?
In 244 pages and 9 chapters organized into four parts, this book covers everything from the Friedman-Modigliani theoretical debate to the NextGenerationEU program and the proposals of the Draghi Report. Specifically, in Part A (chapters 1-3) it reconstructs the theoretical dispute over the relationship between fiscal and monetary policy from 1950 to 1980: Milton Friedman and the quantity theory of money, the Friedman-Meiselman and Ando-Modigliani debates, the Andersen-Jordan equation (St. Louis Equation), evolving into the modern Fiscal Theory of the Price Level (FTPL), and concludes with empirical studies for the USA, UK, and EU member states.
Part B (chapters 4-5) focuses on debt in monetary unions, presenting debt correction mechanisms (market vs numerical targets/institutional arrangements), including a case study on Greek debt through the lens of the electoral political cycle theory. This is followed by a systematic analysis of fiscal multipliers using Keynesian and Neoclassical DSGE models, VAR, and a PVAR empirical estimation model for EMU countries.
Part C (chapter 6) offers a critical historical overview of the EMU: from the collapse of Bretton Woods, the Werner Report, the Maastricht Treaty and nominal convergence criteria, through the Stability and Growth Pact, the Sixpack and Two-pack regulations, the European Semester and the ESM, up to the governance shift during the pandemic with NextGenerationEU and the Multiannual Financial Framework.
Finally, Part D (chapters 7-9) completes the book with monetary policy in the EMU: the operating principles and institutions of the ECB, conventional and unconventional monetary policy measures from the 2007-8 financial crisis to the post-pandemic period, the theory of optimal currency areas (OCA), and the Banking Union with its three pillars (SSM, SRM, EDIS).
This book is aimed at readers (students, young researchers) who follow discussions about "debt," "ECB," and "Stability Pact" without the theoretical background to evaluate them, turning the economic "noise" of the news into a structured framework of understanding, providing the sense of competence every new economist needs. It is intended for advanced undergraduate and graduate students in Economics, Finance, European Studies, Political Economy, and International Relations; doctoral candidates working in the field of European economic governance; as well as public policy analysts, central bank economists, and research institute professionals.
