A comprehensive study of the international coordination of economic policy in a monetary union. It carefully discusses the process of policy competition and the structure of policy cooperation. As to policy competition, the focus is on competition between the union central bank, the German government, and the French government. Similarly, as to policy cooperation, the focus is on cooperation between the union central bank, the German government, and the French government. The key questions are: Does the process of policy competition lead to full employment and price stability? Can these targets be achieved through policy cooperation? And is policy cooperation superior to policy competition? Another important issue is monetary competition / monetary cooperation between Europe and America.

Discusses the target zone proposal for exchange rate management, a formula for the growth of domestic nominal demand calculated to support stable, noninflationary growth. Includes principles that should govern monetary and fiscal policy in each country to enable them to persue simultaneously the intermediate targets for both domestic demand and the exchange rate.