budget plans of the government. in the short term, some additional fiscal spending might be possible. however, with respect to macroeconomic stabilisation, any further stimulus appears unnecessary, unless a perceptible deterioration in the economic outlook becomes apparent. germany ’ s output gap is about to close and forecasts don ’ t foresee a marked deterioration. it would be important to use the leeway wisely in order to promote sustainable growth in the long run and not just cause a flash in the pan. targeted investments in infrastructure, expenditure on research and education, and promoting incentives to work and invest by reducing taxation are keywords in that context. climate change is another important challenge, for which the german government has just proposed a package of measures. the current account surplus is already in the process of shrinking, and a loosening of fiscal policies may contribute to that. but we shouldn ’ t expect miracles. according to our calculations – and even in a more optimistic scenario – fiscal policy measures of a realistic size would reduce only a smaller part of germany ’ s current account surplus. they would raise imports only to some extent. and the impact on the current account deficit to gdp ratio in the us would be even far smaller. [ 8 ] one intuitive reason is the difference in sheer economic size : the us economy is roughly five times as large as the german economy. 3 trade tensions when considering options beyond fiscal policy, import tariffs in particular seem to be back in fashion. proponents believe that higher tariffs can solve several problems at once : they claim that raising tariffs can reduce current account deficits, protect jobs, and even make people better off. this belief is mistaken. indeed, even the impact of new tariffs on the current account balance is ambiguous. [ 9 ] intuitively, imports will be reduced. but exports are likely to fall at the same time, due to weaker foreign demand and an appreciation of the domestic currency. more importantly, by introducing new tariffs, a country runs the risk of damaging its own economy. tariffs increase the prices of imported goods, and this weakens the purchasing power of consumers. indeed, american researchers have found that the us tariffs introduced last year were almost completely passed through into us domestic prices. [ 10 ] retaliatory tariffs adopted by other countries will probably do even further damage. as roberto azevedo, director general of the world trade organization warned : “ an eye for an eye will leave us all blind. ” the trade conflict between the united states and china

the imf and the oecd make their assessments of euro area economic policies available to the public. in the context of surveillance, the international community is also developing common understandings on a number of “ rules of the game ” to be implemented in each individual country on a voluntary basis. an example is given by the imf code of good practices on transparency in monetary and financial policies. the selection of best practices and rules enhances competition and transparency among policymakers, thus making the idea of good public governance a central component of international cooperation. third, consultation and surveillance are the forms of international cooperation which are relevant to the ecb in the area of macroeconomic policies. any form of ex ante international coordination of monetary policy with other macroeconomic policies could easily be incompatible with the eurosystem ’ s mandate and independence. attempts to coordinate ex ante would not only blur the specific responsibilities of individual policymakers, but also reduce their accountability. in determining its monetary policy stance, the ecb should and does take into account all relevant information. it cannot let its policy be determined solely by the current and future course of other policies. this could easily compromise the maintenance of price stability. the inappropriateness of ex ante policy coordination also applies to the more specific option of exchange rate coordination between large economic areas, for instance by setting ranges for the fluctuation of the major currencies. in this regard, i should like to take the opportunity to reaffirm that the ecb does not pursue any exchange rate target. our objective is to maintain stable prices in the euro area and not a specific level of the euro ’ s exchange rate. last but not least, the eurosystem takes part in the process of international cooperation not only in its role as a “ primary player ” - ie when euro area monetary and exchange rate policies are involved - but also in its roles as advisor to other euro area authorities on international issues and “ catalyst for cooperation ”. in this case, international cooperation is mainly designed to ensure global financial stability and enhance the architecture of the international monetary system. the economic rationale for this kind of cooperation can be summarised as follows. first, financial instability can materialise even with sound macroeconomic policies, as a result of factors such as inadequate supervision in emerging market economies and so - called “ contagion ”, ie the international transmission of instability. second, a world divided into sovereign states has inevitably moved more rapidly towards full capital mobility than towards common rules