By Philip LaneMarch 6th, 2014
Applications are sought from candidates interested in pursuing a PhD in energy economics in Trinity College Dublin. Areas of interest include topics on energy in the fields of behavioural economics, industrial organisation, finance and microeconomics. This PhD project is sponsored by Science Foundation Ireland and funding covers PhD stipend and fees for four years plus a travel and equipment budget. Teaching opportunities may also be available. Interested PhD candidates must hold a masters in Economics (with content similar to the MSc in Economics offered by the TCD Economics Dept). Interested applicants should send their CV to Eleanor Denny (dennye at tcd.ie) by 31st March 2014.
Yesterday, the EC published the results of the in-depth reviews under the Macroeconomic Imbalance Procedure. The conclusion for Ireland is that there are “imbalances that require specific monitoring and decisive policy action”.
The MIP has been around for a couple of years but it is still far from clear that it has delivered anything. One thing we do get are documents which compile and illustrate a very broad range of data on the Member States. Yesterday these included the in-depth review of Ireland which has 65 graphs to peruse, but with little to be learned.
The Central Bank have released the Q4 2013 update of their mortgage arrears statistics.
For Primary Dwelling Houses (PDHs), 12.6 per cent of accounts are in arrears of 90 days or more. This compares to 11.4 per cent of accounts in similar arrears in the unaudited monthly data for December published by the Department of Finance.
The Department of Finance figures cover the six banks operating under the Mortgage Arrears Resolution Targets (MART) process. These banks (ACC, AIB, BOI, KBC, PTSB, ULSTER) provide 90 per cent of mortgage lending in Ireland so it is clear that the remaining 10 per cent of mortgages (from the former BOSI and INBS as well as the various sub-prime lenders) have a far higher arrears rate – somewhere around 23.5 per cent. The 90-day arrears rates for the INBS and subprime mortgages are greater than 50 per cent.
In today’s Central Bank statistics we see the total number of PDH accounts in arrears continue to fall and for the first time there was a decline in the number of accounts 90 days or more in arrears.
However, the situation of those in existing arrears continues to deteriorate with yet another significant increase in the number of accounts now 720 days or more in arrears (31,834 to 33,589).
On average the accounts greater than 720 days in arrears are just under €42,000 in arrears. Across the statistics there is an average of roughly 1.25 accounts per household.
The outstanding balance on mortgages in arrears fell from €25.6 billion to €24.4 billion of which €18.2 billion are in arrears of 90 days or more. The total amount of arrears rose from €2.17 billion to €2.24 billion.
The total amount of PDH mortgage debt continues to fall and is now at €107.4 billion, compared to €118.6 billion when the series began in September 2009. However, it should be noted that the release mentions “asset sales” that took place over the quarter but it is not clear what impact these have on the figures. The sales refer to mortgages that were sold by one of the reporting institutions, and are therefore no longer included in the statistics.
At the of December there were 84,053 restructured PDH accounts and 79.3 per cent were deemed to be meeting the conditions of the restructure. There is a new table providing these rates by each type of restructure.
Reduced payment less than interest only (4,264) and arrears capitalisation (18,516 accounts) are the worst performing restructures for PDH accounts. There were only 14 accounts granted a permanent interest rate reduction.
As expected the number of split mortgages continues to grow rapidly. It increased from 1,154 in Q3 to 3,268 in Q4 and, with 96.3 per cent compliance, it is the best performing restructure for PDHs. This is likely linked to the incentives built in to the restructure. There are likely to be many more split mortgages coming through as there are 9,722 restructured accounts classed as “Other” most of which are “accounts that have been offered a long-term solution, pending the completion of six months of successful payment.”
There were 63 forced repossession in the quarter and 105 voluntary surrenders.
Court proceedings were initiated in 1,491 cases. Up to Q2 2013 the average number of proceedings issued per quarter was around 250. This increased massively in the second half of 2013. During Q4, 258 court proceedings were concluded and 82 court orders for repossession were granted. Of the 176 concluded by other means it is probable that many of these see the borrower and lender enter a new arrangement through a restructuring of the original loan agreement with others ending by way of voluntary surrender/abandonment.
Data on the Buy-to-Let sector are also included in both releases.
My recent post on the results of the latest Quarterly National Household Survey (QNHS) provoked some discussion of the Irish unemployment data. I thought it would be helpful to follow up by comparing the evidence available from three measures of unemployment, namely, the Live Register (LR) and two series derived from the QNHS.
The LR data are based on administrative records of those ‘signing on’ for various entitlements, principally Jobseeker’s assistance and benefit. It also includes some people who are working short-time, as well as some seasonal and casual workers who are not fully unemployed, and some people gaining credited social welfare contributions who may not be actively seeking work. In fact Central Statistics Office in its monthly release of the LR figures warns that they are not designed to measure unemployment.
The QNHS is designed specifically to measure employment and unemployment. Similar surveys are conducted across the EU with the aim of providing internationally-comparably measures of labour market performance. The widely-quoted measures of employment and unemployment from the QNHS are based on International Labour Office (ILO) definitions. To be ‘ILO unemployed’ a person must in the week before the survey be without work but available for work and have recently taken specific job-search steps.
A separate measure of unemployment is also published in the QNHS, based on the concept of ‘Principal Economic Status’ – that is, what the respondent considers his or her ‘usual situation with regard to employment’ .
The following Figure shows how these three measures of unemployment have behaved since 2007.
(The LR figures are published monthly. Quarterly averages have been calculated for comparability with the QNHS data. The figures have not been seasonally adjusted.)
The most important showing is the broad consistency of the three measures, especially with regard to changes in the level of unemployment. There is no evidence of a trend in the divergences between the series.
As is to be expected the LR is consistently higher than the ILO measure of unemployment. The excess has varied from a high of 68 per cent in 2007 Q1 to a low of 36 per cent in 2012 Q2. There was a marked downward trend in the ratio between 2008 and 2012 – in times of rising unemployment the gap between the two measures narrows, but as the labour market improved from mid-2012 onwards the ratio has risen. ILO unemployment has fallen by 71,000 since mid-2012, the LR by only 54,000.
The PES measure falls consistently between the two other series, but closely tracks their movements.
In recent years both here and in the US increased attention has been devoted to ‘discouraged workers’ - people who are no longer seeking employment because they believe there are no jobs available. In response to the desire to improve the measurement of unemployment during the recession, a new series on the ‘Potential Additional Labour Force’ (PALF) has been presented in the QNHS. This includes ‘persons seeking work but not immediately available’ and ‘persons available for but not seeking work’.
Since it was launched, the PALF series has followed the same broad pattern as the three measures of unemployment shown in the Figure. Over the course of 2013 the numbers include in the PALF have fallen from 60,000 to 49,300.
Much further analysis could be performed on the these data. It would be interesting to look at the series by age and sex, for example. But suffice for the moment that all the available evidence paints a consistent picture of recent developments in the Irish labour market.
The results of the Quarter 4 2013 National Household Survey are available here.
The year-on-year increase in the numbers at work of 3.3% is all the more remarkable in view of the continuing decline in public sector employment.
The overall unemployment rate (seasonally adjusted) fell from 12.7% to 12.1%, and the long-term rate from 8.2% to 7.2%.
I have a piece on the subject in the most recent issue of Finance and Development, available here.
Production lags being what they are, I wrote the article in mid-December. Since then, Wolfgang Münchau has declared the Eurozone policy debate over (and not in a good way); the German Constitutional Court has issued a ruling on OMT that is potentially much less benign than is commonly assumed; and Italy has installed its third non-elected Prime Minister in a row, with a notorious multiplier denier as Finance Minister thrown in for good measure. None of this has cheered me up.
By Ronan LyonsFebruary 26th, 2014
Always a controversial topic, the latest university rankings by QS have been published. More details here. The aim is to identify the top 200, meaning something of an abrupt stop once they get to 200. (I feel the need to put a disclaimer here that I post this not because I stand over the ranking’s exact methodology, but rather rankings such as these are used by both prospective students and policymakers, hence they are important.)
Of interest to this readership, the ranking of Economics Departments in Europe is here. Trinity features in the 51-100 cohort and UCD in the 100-150. (Digression: nice to see a popular ranking recognise the bounds of uncertainty, although this may not be the best way to do it.) Six of the top seven Economics departments in Europe are British, with one each from Italy, Sweden, the Netherlands, Spain, Switzerland and France also in the top dozen.
9th-level Ireland has a handy table of Ireland’s top ranking departments across all disciplines from 2011 to 2014. Four departments (all in TCD) are in the top 50 in their discipline. A further 18 are in the 51-100 group (including three law departments).
This morning’s Eurointelligence briefing put me on to this article in Les Echos, which in turn led me to this Ipsos opinion poll. It contains several sobering findings, notably with respect to foreigners. But the finding that struck me most — since this is something I have been writing about for years now — is that a majority of French working class voters now want to leave the Euro. Indeed, only 34% of French workers think that EU membership is a good thing.
Isn’t it amazing how short run blips in various economic indicators can lead powerful people to assume that all is well with the EMU project? It is slow moving variables — long term unemployment, gradual shifts in public opinion, and so on — that pose the greatest threat to the Euro’s survival. If the far right does as well as people now seem to think it will in the European elections, this will presumably be presented in the media as a “shock” to the system, but has it not been obvious since 2010 at the latest that something like this was likely, given Eurozone macroeconomic policies? And has it not been obvious for years that actually existing EMU is harming the broader European project?
Europe’s political leaders should remember what Ernest Hemingway said about bankruptcy.
By Philip LaneFebruary 20th, 2014
The new issue of The Economist has a special report on “Companies and the State,” with Ireland featuring in this article.
By Philip LaneFebruary 20th, 2014
Bruegel report here.
By Philip LaneFebruary 19th, 2014
Landon Thomas writes in the NYT here.
By Philip LaneFebruary 16th, 2014
Details via TCD jobs site here. (Set competition type to Research and Department to IIIS.)
I dare say it will strike most people as pie in the sky, but it makes sense that people who want to preserve the Euro start formulating proposals such as this. Two reasonable conditions attaching to any such proposal seem to me to be that: (a) entry to any such community be decided by popular referenda in each country; and (b) that there be some sort of Connecticut compromise in place so that the rights of small states are protected.
By Philip LaneFebruary 14th, 2014
By David MaddenFebruary 13th, 2014
The Irish Government Economic and Evaluation Service has launched its new website at http://igees.gov.ie/
By Philip LaneFebruary 12th, 2014
By Philip LaneFebruary 12th, 2014
This paper by Keith Walsh (Revenue Commissioners) is illuminating on the taxes paid by US firms in Ireland and explains the differences between Revenue-sourced tax data and the BEA-sourced data - here.
The issue of effective tax rates, especially for the corporate income tax, rightfully continues to attract a lot of attention. The front page of The Irish Times features a story by Carl O’Brien which is based on a recent paper produced by Prof. Jim Stewart. The paper argues that:
“data from the US Bureau of Economic Analysis gives a more accurate estimate of effective tax rates for US subsidiaries operating in Ireland and elsewhere. This data shows that for 2011, US subsidiaries operating in Ireland have the lowest effective tax rate in the EU at 2.2%.”
The paper provides a useful critique of the World Bank/pwc report on effective tax rates but to argue that the BEA data tells us anything about effective tax rates in Ireland is wide of the mark.
For Ireland, the BEA data indicate that, in 2011, US companies here had $144 billion of net income and paid an affective tax rate of 2.2 per cent. The low effective tax is correct but it wasn’t achieved in Ireland.
There is nothing close to $144 billion of US MNC profits in Ireland. Such massive profit figures do not appear in the statistics produced by either the CSO or the Revenue Commissioners. The gap between GDP and GNP is large but it is not that large.
The post continues below the fold. Apologies for the length.
By Philip LaneFebruary 10th, 2014
Thanks to generous donations from alumni, TCD Economics is offering some PhD scholarships. Details here.
By Philip LaneFebruary 7th, 2014
FR report here.
Sincere thanks to Geary’s Mark Hargaden who processed the recordings from last week’s conference. For each speaker there is an audio recording synchronised with the slide show. There is a separate link to slides only, for those who do not want to listen. Unfortunately, due to a technical hitch, we did not secure an audio recording from Paul Gorecki, but we do have his slides.
ECB makes progress with asset quality review, and confirms stress test parameters for comprehensive assessment
By Philip LaneFebruary 3rd, 2014
The main results from the sample of respondents are: