Publication

This paper examines the design of the EU’s Macroeconomic Imbalances Procedure (MIP) and explores whether the framework can effectively identify macroeconomic imbalances that could jeopardize the functioning of the European Monetary Union. The author analyzes an array of indicators used to measure macroeconomic imbalances and concludes that the indicators used in the MIP should be seen as relative rather than absolute, and forward rather than backward looking in order to effectively warn of future crises.