Assessment and Recommendations
I. A Maturing Cycle: Macroeconomic Developments and Prospects
-The output gap is closing
-The European job machine
-How subdued has core inflation remained?
-Near-term prospects
-Prospects for further economic integration in Europe
II. Structural Reforms to Raise the Economic Speed Limit
-Stronger growth at low inflation?
-Deepening product market integration to foster competitive pressures
-Financial market fragmentation: a barrier to firm entry and development
-Sustaining progress towards high employment
-The timing and size of any acceleration in potential growth remain uncertain
III. Fiscal Conditions Facing Monetary Policy-Makers
-Fiscal policy coordination
-How "safe" are the targeted fiscal positions?
-How pro-cyclical is the fiscal stance becoming?
-How should taxes be cut?
IV. Monetary and Exchange Rate Policy
-Exchange rate misalignment
-Monetary policy in action
-Can the policy framework be improved?
-Strengthening financial supervision
Annex I. Underlying Inflation
Annex II. Switzeroland: Integration without Membership
Annex III. New Members in Waiting
Annex IV. The EMU Processes as Tools to Manage Policy Interdependence
Annex V. Car Prices
Annex VI. Remaining Price Dispersion in the Single Market
Annex VII. Estimating the Euro's Equilibrium Exchange Rate