Overview - Macroeconomic Imbalance Procedure

Macroeconomic Imbalance Procedure (MIP) - Overview


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MIP: what is it?

The Macroeconomic Imbalance Procedure (MIP) is a surveillance mechanism that aims to identify potential macroeconomic risks early on, prevent the emergence of harmful macroeconomic imbalances and correct the imbalances that are already in place. It is therefore a system for monitoring economic policies and detecting potential harm to the proper functioning of the economy of a Member State, of the Economic and Monetary Union, and of the European Union as a whole.

In order to detect potentially harmful imbalances and competitiveness losses at an early stage of their emergence, a scoreboard has been implemented. It consists of a combination of stock and flow indicators which can capture both short-term rapid deteriorations as well as the long-term gradual accumulation of imbalances.

What is included in the scoreboard?

The Scoreboard for the surveillance of macroeconomic imbalances includes fourteen headline indicators for the identification and monitoring of external and internal macroeconomic imbalances as well as employment and social developments in order to gain a broader understanding of the social consequences of macroeconomic imbalance. The MIP Scoreboard is complemented by auxiliary indicators that allow a better understanding of the risks and help identifying relevant policy measures.

The scoreboard and the thresholds are not applied mechanically as the scoreboard is complemented by an economic reading. The aim of the scoreboard is to filter countries that warrant in-depth studies in order to determine whether the potential imbalances identified in the early-warning system are benign or problematic.

The composition of the scoreboard is subject to review, in order to adapt it to the changing nature of macroeconomic imbalances due, inter alia, to evolving threats to macroeconomic stability or enhanced availability of relevant statistics. The MIP Scoreboard is a part of an annual exercise, where the first step is the compilation of an Alert Mechanism Report (AMR).

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