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Is there a general theory of austerity? by Professor Simon Wren-Lewis, University of Oxford

A lecture organised by The Royal Irish Academy in association with University College Dublin. Chaired by Patrick Honohan, Governor, Central Bank of Ireland (September 2009–November 2015)

Austerity may be defined as a large fiscal contraction that causes a substantial increase in unemployment. If the government has a budget deficit that is unsustainable, or a debt level that is too high, it is sometimes suggested that austerity is inevitable. For an economy with a flexible exchange rate and debt in its own currency, which includes the Eurozone as a whole, this is simply false. Fiscal contraction can always be delayed until monetary policy can offset the deflationary impact of any fiscal contraction. Unfortunately this is not true for a member of a currency union that requires a greater fiscal contraction than the union as a whole. Even in this case, however, a sharp and deep fiscal contraction will be an inefficient waste of resources. As the macroeconomic theory behind these propositions is simple and widely accepted, the interesting question about the current global austerity is why it has happened.

Simon Wren-Lewis is currently Professor of Economic Policy at the Blavatnik School of Government at Oxford University, having previously been a professor in the Economic Department at Oxford. He is also an Emeritus Fellow of Merton College. He began his career as an economist in H.M.Treasury, and then moved to the National Institute of Economic and Social Research, where he ended up as Head of Macroeconomic Research. In 1990 he became a professor at Strathclyde University, and from 1995 to 2006 he was a professor at Exeter University. He has published papers on macroeconomics in a wide range of academic journals including the Economic Journal, European Economic Review, and American Economic Review. Since becoming an academic he has advised H.M.Treasury, the Bank of England and the Office for Budget Responsibility. In September 2015 he was appointed to the British Labour Party’s Economic Advisory Committee. He writes on economic policy issues in various publications and at his blog: mainlymacro.blogspot.com.

Academic work has often had a strong policy focus. In 1989 he published, with colleagues at the National Institute, a study suggesting that an entry rate of 1.95 DM/£ into the ERM was too high, which at the time was a minority view. In 2002 he wrote one of the background papers for the Treasury's 2003 assessment of its five economic tests for joining EMU. He was also the principal external advisor to the Bank of England on the development of its core macroeconomic models. A long time advocate of Fiscal Councils, his 2007 proposal was influential in the formation of the UK‘s Office of Budget Responsibility. Since starting his blog at the end of 2011, he has written extensively about macroeconomic policy in the UK and the Eurozone.

Conference: Debating Austerity in Ireland

30th October 2015

 

Programme

Session 1: Framing austerity – Ireland in a European context

09:15     Registration

09:30     Welcome: Imelda Maher MRIA

Introduction: Rosalind Pritchard MRIA, Ulster University and Chair, RIA Social Sciences Committee

09:45     Why austerity?— John McHale, Dept of Economics, NUIG

10:05     Debating austerity —Kieran Allen, School of Sociology, UCD

10:25     Q&A

10:45     Coffee Break

 

Session 2: Challenging austerity: power, responsibility and impact

11:15     The view from the European periphery— Niamh Hardiman, School of Politics and International  Relations, UCD)

11:35     Austerity and the media— Julien Mercille, School of Geography, UCD

11:55     Resistance and social movements—Niamh Hourigan, Department of Sociology, UCC

12:15     Q&A

12:35     Lunch (participants to make their own arrangements)

 

Session 3: Austerity and the Irish social landscape

13:30     Austerity and inequality —Christopher T. Whelan MRIA, Brian Nolan MRIA, and Bertrand Maítre

13:50     Child poverty in a period of austerity —Dorothy Watson, Economic and Social Research Institute)

14:10     Housing & austerity —a two-way street—Ronan Lyons, Department of Economics, TCD

14:30     Q&A

14:50     Break

 

Session 4: Austerity to recovery: where do we go from here?

15:00     Global prospects and macroeconomic issues —Seamus Coffey, Department of Economics, UCC

15:20     A recovery is a dangerous thing —Seán O’Riain, Department of Sociology, MU

15:40     Towards an inclusive and just recovery— Seán Healy, Social Justice Ireland

16:00     Q&A

16:20     Final discussion / comments: Karl Whelan MRIA

16:30     Close of conference

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