Since the final stage of European monetary integration in the mid-1990s, the member countries of the Euro area have been suffering from slow growth and high unemployment. On average, the Euro area's economic performance has been unsatisfactory, in particular since the growth slow down in 2001. The only undisputed achievement of European monetary integration so far has been a remarkable reduction in the inflation rate. However, this reduction comes at the cost of a still present risk of deflation in some of the member countries of the European Monetary Union (EMU), particularly in Germany. What is most striking is the response of economic policy actors in Europe and mainstream economic policy advisers to the challenges posed by the current economic problems: They call for further structural reforms in the labour market and in the social benefit system. However, this would mean following a strategy which has been pursued for over 25 years in order to increase potential growth and to reduce structural unemployment. Monetary and fiscal policies have been downgraded in order to supply a stable environment - which means stable prices and low inflation expectations. In Germany the situation seems to be even more severe than in the rest of Europe. Mainstream economic policy advisers predominantly even deny short run real effects of macroeconomic policies. The present volume covers papers which are critical towards orthodox analysis and mainstream European economic policy concepts. They explore alternative approaches to achieve higher growth and lower unemployment. The first section assesses the reasons for slow growth and high unemployment in Europe. The second section concentrates on the problems associated with the enlargement of the European Union. Last but not least, the papers in the third section discuss alternative economic policy concepts. Contents Eckhard Hein, Arne Heise and Achim Truger Introduction I. European Macroeconomic Policy Analysis Markus Marterbauer and Ewald Walterskirchen Neglecting demand and cycle in the Euro area Catherine Mathieu and Henri Sterdyniak A European fiscal framework designed for stability or growth? Hubert Hieke Germany's financial balances and the Stability and Growth Pact - Some potentially damaging aspects of the deficit criterion Louis-Philippe Rochon and Sergio Rossi The monetary policy strategy of the European Central Bank. Does inflation targeting lead to a successful stabilisation policy? Camille Logeay, Katja Rietzler, Sabine Stephan and Rudolf Zwiener Understanding wage, price and export performance in the Euro area. Evidence form a multi-country-macro-econometric model Jesus Ferreiro and Carmen Gomez New incomes policy in Spain II. EU-Enlargement Jan Priewe Exploring the future borders of the European Union Jens Hölscher and Johannes Stephan Money and credit market integration in an enlarging Euro zone: Methodological issues Wolfgang Blaas and Karoly Lóránt Current account as a structural weakness of the new EU members Özlem Onaran Speculation-led growth and fragility in Turkey: Does EU make a difference or 'can it happen again'? III. Alternative Policy Concepts Pascal Petit Growth in Europe: Putting diversity to work Jörg Huffschmid Economic policy for the European Social Model Arne Heise European economic governance: Policy-making beyond the nation-state? Riccardo Bellofiore and Joseph Halevi Is the European Union Keynesian-able? A sceptical view