I think that rules are important and may be effective. But, given the level of uncertainty about the relative importance of moral hazard (in the conduct of national fiscal policies), about the size of fiscal multipliers and potential output, I think that some degree of flexibility is desirable.

The problem with the dual mandate is that the ECB is the only central bank in the world that is not backed by a state and a political authority. This exceptional degree of independence of unelected officials requires strong constraints on their policies, but it should not prevent monetary policy to respond to EMU wide business cycles. Ideally, unemployment and growth targets should be left to national governments. However, there are many reasons why counter-cyclical fiscal policies are bound to be less effective in the EMU. Among these are the limited fiscal space of some countries (exacerbated by fear of speculative attacks on sovereign debts) and the non internalized EMU wide benefits of national expansionary policies. Hence, strict adherence to the single mandate is dangerous and not realistic. Progressing toward a political union where federal institutions attain more legitimacy may overcome the conflict between independence and dual mandate.