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This speech by Mario Draghi is generating some interest in comments.   It usefully puts the ECB’s approach to monetary policy during the crisis in a comparative perspective. 

Some complementary reading: Paul Krugman on euro area macro policy; Simon Wren-Lewis and Antonio Fatas on the dual mandate; Janet Yellen on communication/expectations management at the Fed; and Gavyn Davies on inflation targeting.   On the subject of inflation targeting, this new Vox ebook contains a number of interesting perspectives, including chapters by Stefan Gerlach and Karl Whelan (pdf here). 

Understanding the Changing Worlds of Capitalism:
New Perspectives on the Political Economy of Work, Production and Employment Regimes

A Research Conference
NIRSA/ Sociology
May 1st 2013, Renehan Hall, NUI Maynooth

Sponsored by the European Research Council and the Irish Research Council

The various forms of capitalism are in crisis, as are many of the theories that have dominated understandings of capitalism in recent decades.  This conference draws together leading international scholars to examine changing European capitalisms, with a particular focus on how the organisation of work, employment and production regimes is changing. We explore how theories must shift to account for changing capitalisms.

Speakers include Dorothee Bohle, Rossella Ciccia, Bernhard Ebbinghaus, Eoin Flaherty, Béla Greskovits, Peer Hull Kristensen, Frances McGinnity, Lars Mjoset, Mary Murphy, Seán Ó Riain, Luis Ortiz, Karen Shire, Markus Tünte.

Full programme and information here.

The conference explores a variety of theories of political economy (e.g. Polanyian, institutionalist, pragmatist); different forms of capitalism in Europe (liberal, Christian democratic, social democratic, post-socialist, Mediterranean); and various institutions shaping work (e.g. welfare regimes, industrial relations, family, transnational work and technological change).

Registration is free but places are limited.

Please register here.

Enquiries to newdeals@nuim.ie

Click here for information on how to get to NUI Maynooth Campus by road or rail

This week marks the eightieth anniversary of Keynes’s inaugural Finlay lecture at UCD.

Charles Lysaght has a background piece about it in today’s Irish Times.

Putting questions of immediate political feasibility aside, Simon Wren-Lewis asks in a new post if there is a better approach to establishing a fiscal Lender of Last Resort (LOLR) for the eurozone. 

As Simon notes, I expressed some sympathy for the Commission in a previous post.    The Commission recognises the fragility of the eurozone in the absence of a LOLR.   This follows from the well-know multiple equilibria problem (see here).   There is good equilibrium with low expectations of default and consequent low interest rates, creating a debt sustainability situation that validates the initial expectations.  But there is also a bad equilibrium with high expectations of default and consequent high interest rates, again creating a debt sustainability situation that validates the initial expectations.   In part to develop the political support for a fiscal LOLR to coordinate expectations around the good equilibrium (where it is thought to exist), the Commission has pushed the strengthening of fiscal rules and support programmes for countries in difficulty that lean heavily fiscal (and other) conditionality and intrusive surveillance.   

 Simon usefully asks it there is a better way, while recognising the huge political obstacles at present.   His proposal centres on a significant change in the approach to OMT.   Based on an assessment of debt sustainability by a collective of independent fiscal councils – effectively an assessment of whether a good equilibrium exists – the ECB would commit to the necessary bond market interventions to keep interest rates low.   Assuming no change in its mandate, the rationale for the ECB’s participation would presumably be that it would otherwise be unable to operate a single monetary policy where, without their own central bank capable of acting as a LOLR, many countries in the eurozone are susceptible to falling into a bad equilibrium, with the added risk the entire single currency project could unravel.   One question is whether countries facing debt sustainability concerns would be politically capable of making the necessary difficult adjustments without in the absence of programmes with explicit conditionality.

Another dimension of Simon’s proposal is that the fiscal rules should become more sensitive to the aggregate fiscal stance of the eurozone in the context of a zero lower bound on monetary policy, with the obligation to adopt less contractionary policies falling on countries with stronger fiscal positions. 

It is interesting to contrast this proposal with the recent widely discussed observations of Ashoka Mody on the relative merits of adjustment/assistance and default as a means of dealing with debt sustainability challenges (Morning Ireland interview here).    Ashoka’s view is informed by his reading of history of sovereign defaults as involving relatively low output costs.   A rather different reading of the history is given in this survey of the literature on sovereign defaults.    Moving to a regime with a low default trigger would also make private investors extremely wary of sovereign debt, increasing the fragility of market access.   For the long-term, such a low moral-hazard regime certainly has attractions — but it would be one hell of ride along the way.    

I am bit late with these links but the Spring edition of the NERI Quarterly Economic Observer can now be accessed on the NERI website here.

The latest edition of Quarterly Economic Facts may be accessed here .