MACROECONOMIC POLICY INSTRUMENTS MORE EFFECTIVE .
MORE PRECISELY , THE ECONOMIC RATIONALE OF CONCERTED ACTION IS THAT :
- PURELY NATIONAL ACTION , IN ECONOMIES WITH LARGE EXTERNAL TRADE SECTORS , WILL TO A HIGH DEGREE BE DISSIPATED THROUGH THE LEAKAGE OF DEMAND ABROAD ; THUS THE MULTIPLIER EFFECT OF STIMULATORY ACTION ON THE DOMESTIC ECONOMY WILL BE LOWER THAN IN A LESS OPEN ECONOMY ,
- THIS MAKES IT LESS ATTRACTIVE TO USE POSSIBLE ROOM FOR MANOEUVRE IN DEMAND MANAGEMENT POLICY , SINCE , FOR EXAMPLE , THE FISCAL PAY-BACK OF BUDGETARY MEASURES IS DIMINISHED IN AMPLITUDE AND THE NECESSARY CONFIDENCE OF CONSUMERS AND INVESTORS WEAKENED ,
- THIS KIND OF PREOCCUPATION HAS BEEN REINFORCED BY DOUBTS IN INDUSTRIAL AND FINANCIAL CIRCLES AS TO WHETHER EXPANSIONARY ACTION WOULD HAVE THE DESIRED EFFECT ON THE REAL ECONOMY AS OPPOSED TO AN ADVERSE EFFECT ON INFLATION AND FOREIGN EXCHANGE MARKET EXPECTATIONS ; AND BY CONCERN IN MANY MEMBER STATES THAT THE PUBLIC FINANCES HAVE GROWN EXCESSIVELY IN RELATIONS TO THE GNP ,
- THE ANTIDOTE TO THESE PROBLEMS MUST , AT LEAST IN PART , BE TO POOL NATIONAL INITIATIVES INTO A BROADER AND COHERENT COMMUNITY ACTION , AND SO TO RESTORE THE PROSPECT OF FAVOURABLE MULTIPLIER EFFECTS , A MORE RAPID FISCAL PAY-BACK TO DEMAND MANAGEMENT MOVES , AND CREATE A HIGHER PROBABILITY OF INDUCING THE REAL RESPONSE FROM THE PRIVATE ECONOMY , RATHER THAN AN AGGRAVATION ON MONETARY INSTABILITY .
BEYOND THESE GENERAL PRINCIPLES , HOWEVER , THE PRESENT COMMUNITY ACTION IS MORE AMBITIOUS AND CONCRETE IN FURTHER RESPECTS .
THERE IS THE PARTICULAR CASE OF MEMBER STATES WHOSE ECONOMIES ARE IN THE GREATEST NEED OF MONETARY STABILIZATION AND DEVELOPMENT . A DELIBERATE CONCERTED ACTION BY THE REMAINDER OF THE COMMUNITY ECONOMY TO STRENGTHEN DEMAND IMPOVES THE SETTING FOR DOMESTIC STABILIZATION POLICIES . IN ALL STABILIZATION PROGRAMMES THERE IS THE PROBLEM OF STRENGTHENING THE MONETARY AND PUBLIC FINANCES SITUATION WITHOUT CREATING RECESSION . THE PREPARATION OF SUCH STABILIZATION PROGRAMMES ALONGSIDE A CONCERTED RECOVERY PROGRAMME FOR THE MAJORITY OF THE COMMUNITY INCREASES THE CHANCES OF SUCCESS AND DIMINISHES THE RISKS INHERENT IN STABILIZATION POLICY . IRELAND AND ITALY ARE BOTH CASES IN POINT . THIS IS WHY , AS NOTED ALREADY IN THE TERMS OF THE CONCERTED ACTION DECISION OF 24 JULY , IN THE CASES OF IRELAND AND ITALY THE COMMUNITY STRATEGY INCLUDES A PRIORITY IN THE ALLOCATION OF ITS FINANCIAL RESOURCES IN FAVOUR OF INVESTMENT AND EMPLOYMENT IN THESE COUNTRIES .
THERE IS ALSO THE NEED TO SYSTEMATIZE AND STRENGTHEN FOR THE FUTURE THE MOST POSITIVE FEATURES OF 1978 ' S CONCERTED ACTION EXPERIENCE AND TO IDENTIFY THE PRECISE MEANS OF INCREASING ITS POTENTIAL . THE COORDINATION PROCESS MUST BE ANCHORED IN A MORE EXPLICIT SETTING OF FINAL OBJECTIVES OF ECONOMIC AND FINANCIAL POLICY AND MONITORING OF PERFORMANCE . THE SETTING OF FINAL OBJECTIVES HAS TO BE WORKED THROUGH AT THE TECHNICAL LEVEL MORE THOROUGHLY IN TERMS OF THE COLLECTIVE ANALYSIS OF FORECASTS AND INSTRUMENTAL OBJECTIVES . THE