The latest IFAC report is here.
By Liam DelaneyNovember 23rd, 2014
I posted recently on the implications of the emerging literature on the economics of mental health in the Irish context. I am currently working on some projects looking at the role of mental health in life-long economic outcomes. One of the first papers from this project is below. It shows a substantial predictive effect childhood distress throughout childhood and adolescence on later trajectories of unemployment and also evidence that this becomes particularly marked during recessions. Apologies for self-promotion but I would like to flag an event we are running in Stirling on this topic on December 5th for which there are still places if people wish to attend. Also people interested in working on this area as a researcher or PhD student please feel free to get in touch.
Mark Egan, Michael Daly, and Liam Delaney
Abstract: The effect of childhood mental health on later unemployment has not yet been established. In this article we assess whether childhood psychological distress places young people at high risk of subsequent unemployment and whether the presence of economic recession strengthens this relationship. This study was based on 19,217 individuals drawn from two nationally-representative British prospective cohort studies; the Longitudinal Study of Young People in England (LSYPE) and the National Child Development Study (NCDS). Both cohorts contain rich contemporaneous information detailing the participants’ early life socioeconomic background, household characteristics, and physical health. In adjusted analyses in the LSYPE sample (N = 10,232) those who reported high levels of distress at age 14 were 2 percentage points more likely than those with low distress to be unemployed between ages 16 and 21. In adjusted analyses of the NCDS sample (N = 8985) children rated as having high distress levels by their teachers at age 7 and 11 were 3 percentage points more likely than those with low distress to be unemployed between ages 16 and 23. Our examination of the 1980 UK recession in the NCDS cohort found the difference in average unemployment level between those with high versus low distress rose from 2.6 pct points in the pre-recession period to 3.9 points in the post-recession period. These findings point to a previously neglected contribution of childhood mental health to youth unemployment, which may be particularly pronounced during times of economic recession. Our findings also suggest a further economic benefit to enhancing the provision of mental health services early in life.
In the Irish context, the Growing Up in Ireland study has been conducting research on children and adolescent welfare and health and will (subject to following the group up) be able to examine these findings in the Irish context. As said in the previous post, it is a good time to have a debate about the extent to which enough resources are invested in the development of children in Ireland early in life and particularly to examine outcomes such as resilience and mental health that have not traditionally crossed into economic analysis. The extent to which public investments in mental health remediation services throughout childhood and adolescence might produce a long-lasting flow of psychological and financial benefits is a question that has not been given a great deal of evidence-based debate in the Irish context (with notable exceptions including this excellent project by colleagues at UCD). The emergence of large scale aging cohort study data in the form of the TCD-led TILDA project is another avenue that is starting to show the linkages between mental/physical well-being and economic outcomes throughout life.
UCC have a fixed-term position for a project on Cluster Mapping. Details here.
The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. Edgar Morgenroth (Economic and Social Research Institute) is the local organizer.
The ESR guest lecture will be given by Professor Christopher Udry (Yale University) and the Edgeworth Lecture by Professor Giancarlo Corsetti (University of Cambridge).
The Association invites submissions of papers to be considered for the conference programme. Papers may be on any area in Economics, Finance and Econometrics.
The deadline for submitted articles is the 8th of February 2015 and submissions can be made through this site.
By Ronan LyonsNovember 18th, 2014
The Central Bank is hosting a one-day conference on “Labour Markets over the Business Cycle” on 11 December in Dame Street (programme below). There is a limited number of places still available. If you wish to attend, please email firstname.lastname@example.org by 9 December. Please note that places will be allocated strictly on a first-come-first-served basis.
Labour Market Adjustment over the Business Cycle
A one-day conference at the Central Bank of Ireland
11 December 2014
Liffey room, Dame Street, Dublin 2
email email@example.com to confirm attendance by 9 December
|08:45||Registration and coffee|
|09:00||Opening remarks – “Prospects and Challenges for the Irish Labour Market 2015 – 2020”. John Flynn (Head of Irish Economic Analysis Division, Central Bank of Ireland).|
|Cycles in employment, unemployment and wages|
|Labour market transitions in Ireland – Thomas Conefrey (Irish Fiscal Advisory Council)|
|Wage Cyclicality – Mario Izquierdo (Banco de Espana)
|11:00||Coffee & tea break|
|Labour market attachment|
|Are the marginally attached unemployed or inactive? – Martina Lawless (CBI/ESRI)|
|Sources of wage losses of displaced workers – Pedro Portugal (Banco de Portugal)|
|13:00 – 14:00||Lunch|
14:00 – 15:45
|Wage flexibility in Ireland – Olive Sweetman (Maynooth University)|
|Wage Setting - Flexibility and Rigidity in the UK since 1975 – Jennifer Smith (University of Warwick)
|Labour market adjustment during and after the crisis: the role of policies and institutions|
|Pedro Martins (Queen Mary University of London)|
|Questions & discussion
By Philip LaneNovember 14th, 2014
NY Times article with interesting graphics here.
By Philip LaneNovember 12th, 2014
The Fall 2014 issue of the Journal of Economic Perspectives is free to download here.
Especially topical are:
Zucman, Gabriel. 2014. “Taxing across Borders: Tracking Personal Wealth and Corporate Profits” Journal of Economic Perspectives, 28(4): 121-48.
This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world’s personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.
Kleven, Henrik Jacobsen. 2014. “How Can Scandinavians Tax So Much?” Journal of Economic Perspectives, 28(4): 77-98.
American visitors to Scandinavian countries are often puzzled by what they observe: despite large income redistribution through distortionary taxes and transfers, these are very high-income countries. They rank among the highest in the world in terms of income per capita, as well as most other economic and social outcomes. The economic and social success of Scandinavia poses important questions for economics and for those arguing against large redistribution based on its supposedly detrimental effect on economic growth and welfare. How can Scandinavian countries raise large amounts of tax revenue for redistribution and social insurance while maintaining some of the strongest economic outcomes in the world? Combining micro and macro evidence, this paper identifies three policies that can help explain this apparent anomaly: the coverage of third-party information reporting (ensuring a low level of tax evasion), the broadness of tax bases (ensuring a low level of tax avoidance), and the strong subsidization of goods that are complementary to working (ensuring a high level of labor force participation). The paper also presents descriptive evidence on a variety of social and cultural indicators that may help in explaining the economic and social success of Scandinavia.
By Philip LaneNovember 12th, 2014
New paper from Aidan Regan (UCD) here.
The latest column in the VoxEU series on the economics of World War I is by Steve Broadberry, and is available here.
Yesterday’s Sunday Business Post led with a story that the European Commission has started some “information gathering exercises” into tax arrangements put in place with MNCs in the 1980s and early 1990s. The only company named in the piece is Pepsi.
There is a notable link between Pepsi and Apple. John Sculley was vice-president of Pepsi from 1970 to 1977 and president from 1977 to 1983. He was CEO of Apple from 1983 to 1993. Last week he was in Dublin and gave an interview to RTE’s Science and Technology Correspondent, Will Goodbody. The interview is available on this page and the relevant segment begins at around 08:45. The short transcript and the rest of the post are below the fold.
By Philip LaneNovember 8th, 2014
Patrick Honohan’s speech to MABS event is here.
Jean Claude Trichet’s 19th November 2010 letter to “Tánaiste” Brian Lenihan is here. Brian Lenihan’s reply. It should be remembered that Gavin Sheridan has been to the fore in the efforts to get the Trichet letter published.
UPDATE: ECB page on this is here with lots of related information and material.
By Philip LaneNovember 6th, 2014
Otmar Issing and Ludger Schuknecht explain in this WSJ oped that “Berlin’s pro-growth efforts in the early 2000s saved money rather than require extra spending” – here.
By John CotterNovember 5th, 2014
The Financial Mathematics and Computation Research Cluster (FMC2) are pleased to invite you to attend the following topical talk by René Stulz, a member of our Scientific Advisory Board.
Financial Crises: Lessons Learned and Financial Reform
René M. Stulz, Chair of Banking and Monetary Economics, The Ohio State University
Date: Monday 17 November 2014
Venue: Institute of Banking, 1 North Wall Quay, Dublin1 (inside the Citi Building)
Time: 6:00pm – 7:00pm
Refreshments will be served from 5:30pm.
René M. Stulz Bio:
René M. Stulz is the Everett D. Reese Chair of Banking and Monetary Economics and the Director of the Dice Center for Research in Financial Economics at The Ohio State University. He has also taught at the Massachusetts Institute of Technology (MIT), the University of Chicago, and the University of Rochester.
René M. Stulz was the editor of the Journal of Finance, the leading academic publication in the field of finance, for twelve years. He is on the editorial board of more than ten academic and practitioner journals. He has published more than sixty papers in finance and economics journals. He is the author of a textbook titled Risk Management and Derivatives, a co-author of the Squam Lake Report: Fixing the Financial System, and has edited several books.
The Financial Mathematics Computation Cluster (FMC2) is a collaboration between Industry, University College Dublin, Dublin City University, and NUI Maynooth. FMC2 is a Science Foundation Ireland funded Strategic Research Cluster (SRC). The cluster brings together complementary expertise in financial mathematics, financial economics and computer science to create a multi-disciplinary research programme in asset and risk management, areas that are of critical importance to the present and future development of the international financial services sector in Ireland. For further details see http://www.fmc-cluster.org/
By Philip LaneNovember 4th, 2014
Today is a red-letter day in the development of the euro area, with the ECB taking over responsibility for euro area banking supervision. The new banking supervision website is here.
This ECB working paper is worth going through. The potential output calculation is very important for policy makers, because deviations from the economy’s potential output tend to form a large part of the evaluation of macroeconomic performance used by the European Commission and others. Two recent Central Bank working papers discuss the impact on the Irish economy of these measure. See here and here. The estimates have been, shall we say, fairly far off the mark. The chart below shows this. Understanding the potential output calculation is therefore really important when we talk about policy responses to changes in fiscal policy, especially at the EU level.
There is an interesting New York Times Op-Ed article relevant to the proposed Irish Central Bank LTV and LTI caps on residential mortgages. US financial regulators attempted to impose very similar caps, but the caps have now been diluted/dropped in response to political pressure.
The article is behind the NYTimes paywall, but a number of articles can be read per month without paying a subscription. A key quote:
“low underwriting standards — especially low down payments — drive housing prices up, making them less affordable for low- and moderate-income buyers, while also inducing would-be homeowners to take more risk.”
By Philip LaneOctober 31st, 2014
The purpose of this blog is to provide information/analysis on the Irish economy. While many commenters make valuable contributions, comments should focus on the topics under discussion. Comments on the integrity (broadly defined) of individuals are not tolerated.
Some interesting thoughts (and evidence) from Brian Lucey here.
Worth going through, here are the highlights, download the whole report here (.pdf).
- Ireland ranks 37th of 41 OECD countries, ahead of Croatia, Latvia, Greece and Iceland in a league table measuring relative changes in child poverty.
- The recession has hit 15-24 year olds especially hard. Ireland ranks 14th out of 41 countries in a league table measuring the change in NEET. The NEET league table refers to young people who are “Not in Education, Employment or Training” increased by one point to 16.1%.
- In a Gallup poll surveying people’s perceptions of how their lives have changed Ireland ranks 38th out of 41 countries across the OECD, ahead of Turkey, Cyprus and Greece. Irish families are experiencing additional stress and have a lower overall satisfaction with life. The data further shows that people do not believe children in Ireland have the opportunity to learn and grow every day.
- 18 OECD countries recorded a reduction in child poverty during the same period, including Chile, Australia and Poland, which saw a reduction of 7.9%.
I found the charts on pages 8 and 9 very interesting as well.
The relevant documents published by the ECB are here.
One of the key drivers behind the better-than-expected recovery of the Irish financial sector has been the strong inflow of foreign risk capital, particularly from U.S. “vulture funds” as they are inaptly named. This healthy demand for Irish banking assets has allowed the PCAR and PLAR plans for the domestic banks, and the unwinding of NAMA, to progress successfully. Similarly healthy demand for the Irish assets of foreign banks, such as Irish loan portfolios sold by Ulster Bank, has also contributed indirectly to the Irish financial sector’s partial recovery.
There is a risk capital inflow when a foreign institution buys a troubled loan portfolio or property portfolio from an Irish bank, or from an Irish subsidiary of a foreign bank, or from Nama. These risk capital inflows are not intermediated through the Irish banks and do not appear on their balance sheets. Prof. Brian O’Kelly (DCU) and I were able to trace the 2000-2009 destabilizing inflow and sudden outflow of foreign credit into the Irish banking sector using the aggregate Irish banking sector balance sheet Table A4.1 published by the Irish Central Bank. Question: how can one measure this new source of risk capital inflows? It seems healthy and stabilizing rather than (like in 2000-2009) unhealthy and destabilizing, but it still deserves to be measured accurately. Is it necessary to list all the individual deals and add them up? Has some hardworking analyst done that already? Is it possible to create a quarterly or annual time series? Answers on a postcard (or better on a spreadsheet) are welcome!
By Philip LaneOctober 25th, 2014
The Economic Policy Panel took place over the last couple of days – the draft papers are here. Topics included the impact of fiscal austerity; the role of migration in adjustment; and estimates of the impact of the TTIP.
The Irish Times preview the film with the screenplay writer Colin Murphy and producer John Kelleher here. There is also a short clip from the movie to whet the appetite.
Having seen the Fishamble stage production of Guaranteed! last year I am looking forward to the film version which goes on limited release next week. They probably took some artistic license with the adaption but hopefully not too much.
The 2014 Finance Bill was published yesterday and it is available here with related documents.
There’s not a lot new in the Bill. One of the very minor changes relates to mortgage interest relief, with the relief now available to Income Tax payers in Ireland (who derive the bulk of their income in Ireland) for qualifying loans on PPRs in the entire European Economic Area rather than just Ireland. There are plenty of other minor changes.
On the changes to corporate residency rules announced in the budget The National Law Review in the US has published a useful article under the heading: Death of the “Double Irish Dutch Sandwich”? Not so Fast. re: Irish Incorporated Non-resident Companies. It is available here.
Earlier in the week the Minister for Finance and the Opposition Finance spokespeople gave statements to the Dáil on the pre-budget statement of the Fiscal Advisory Council. The transcripts of these Dáil statements are here.
By Philip LaneOctober 21st, 2014
The Bank of Latvia organised a conference on this topic last Friday: materials here.
The speeches by Coeure and Weidmann on the euro area are quite interesting; I can recommend the presentations on Greece; there were presentations on Ireland by myself and Craig Beaumont.
By Frank BarryOctober 20th, 2014
The ‘Battle of Ideas’ festival held at the Barbican in London last weekend included a panel session entitled ‘Piigs can’t fly: Democracy/Technocracy/Austerity’. I was invited to make a 7-minute presentation of my views as expressed at various crisis conferences over the years:
Back in 1986, long before most people imagined that the single currency would really come into being, Paul Krugman wrote of the potential fiscal co-ordination problem: a bias towards excessive restriction because each country ignores the impact of its actions on the exports of others. “Achieving co-ordination of fiscal policies is probably even harder politically than co-ordination of monetary policies. There is not even temporarily a natural central player whose actions can solve the co-ordination problem. None the less, in surveying the problems of European integration, it is hard to avoid the conclusion that this is the systemic change most needed in the near future”.
Without this problem ever having been addressed, the potential for exchange-rate realignment was locked down. As many US economists warned, the euro was a federalist project lacking in federalist foundations, whether minimalist (banking union or federalist insurance schemes) or maximalist (a Washington-style federal budget).
In the face of this existing (anti-Keynesian?; pre-Keynesian?; antediluvian?) institutional structure, Ireland had no choice but to impose austerity (which would have been required even in the absence of the disastrous bank guarantee of 2008). The large primary budget deficits – which meant that government spending would still far exceed tax revenues even if interest payments ceased – precluded debt default.
The actions of the ECB in 2010 in forcing us to pay off remaining unsecured bank bonds (by threatening to cut off liquidity) appear to have been beyond its mandate and it is difficult to think of any reason not to support economist Colm McCarthy’s call for this to be brought to the ECJ. But, as he notes, the need for retrenchment would have remained.
The Irish experience under austerity has been distinguished by remarkable industrial peace. Paddy Teahon, the chief civil servant behind social partnership, argued that the process had promoted a shared understanding among unions, employers and the government of the key mechanisms and relationships that drive the economy. I wrote back in 2009 that “the Teahon view will be seen to be of validity if some agreement can be reached to reduce public-sector pay until the current crisis is overcome”.
As to whether austerity has worked, it has achieved what it was supposed to achieve, which was to close the deficit and slow the accelerating debt ratio. It was never supposed on its own to get the economy back to work, but rather to position the economy well for when markets rebounded. The flexibility of the labour market makes it easier for Ireland to bounce back from austerity than is the case for Greece for example. So does the openness of the economy, as long as export markets recover.
[All of the other panellists having been hostile to ‘the displacement of democracy by technocracy’, I suggested that:] Many or most economists of my acquaintance in Ireland were content enough with the policies espoused by, and implemented at the behest of, the troika. Technocracy can be viewed as an advantageous buffer between government and – on the other hand – purveyors of snake oil and the representatives of powerful entrenched interests (though technocrats too are not immune, of course, from regulatory capture).
There’s plenty to discuss from yesterday’s announcements but any OP is not likely to be followed by related comments.
All the relevant documents from the Department of Finance are here.
This is a summary of the aggregate budgetary changes (in €million).
Here are two vintages of the debt interest table. First from the April 2013 SPU.
And this from yesterday’s Economic and Fiscal Outlook:
There are lots of opinions I’m sure on how this (temporary?) improvement was used.