Mario Draghi and Keynes

This article underlines that Draghi’s policy reflections put forward in some recent speeches show strong links with Keynes. However, the side or facet of Keynes’s complex approach that Draghi refers to is not the traditional one based on simple models captured by macroeconomics textbooks, but the ‘informal’ part of the General Theory that develops a wide ‘vision’ of how a complex monetary economy ‘really works’ stressing the internal instability of the economy and the key role of the principle of effective demand, based on uncertainty, confidence, expectations and conventions. This vision also inspires a ‘method’ for interpreting ‘new facts’ and guiding the action in the face of changing circumstances, that is crucial for policymakers like Draghi that have to make critical decisions in the real world.