Year: 2010

A Comment on Comments

I think this blog has been a useful initiative and the comment feature has been an important part of this success. The large number of comments that the site receives is proof of its popularity and impact. However, unlike some popular economics blogs from other parts of the world (Calculated Risk, Baseline Scenario) the debate in the comments is often (not always) well informed and useful. Also, unlike many other blogs, the contributors here have often shown a willingness to engage with the commenters.

As everyone knows, the underlying economic news has generally been pretty bad over the past couple of years. And, even with signs of economic recovery around, there are lots of serious problems and things to worry about. For this reason, many of the posts focus on facts and figures that are negative.

Over time, certain patterns have emerged in the debate in the comments. Some of the commenters on this site have decided that there is somehow a conspiracy of bias among the contributors to deliberately focus on negative things or to (sigh) “talk down the economy” or that contributors are motivated by some sort of political agenda. For people who are contributing in an unpaid manner in their spare time and motivated by the desire to inform the public, this stuff is quite disheartening.

Debate in the comments is practically never censored – personal abuse and Don’t Get Philip Sued are, as far as I can tell, the only things that trigger contributors to lose precious time deleting comments.

However, policy on policing of comments is generally up to the individual contributor. Other contributors can make their own rules but, after what has been a particularly fractious week in the comments, I’ve decided to make the following request of people commenting on my posts:

1. No personal abuse of the economists who contribute to the site or other commenters.

2. No insinuations about grand conspiracies on the part of the evil blog henchmen or commenters.

3. No insinuations about contributors being motivated by their support for some political party.

Those who fail to honour the request should not be too surprised if at some point in between doing all the other things I actually get paid to do, I decide to delete their comments. Personal abuse of named individuals by those who decide to use a nom de blog will be particularly frowned upon. Also, comments whinging about having your comments deleted will also be deleted.

In return, those who keep to the guidelines can disagree with me all they want.

No Really, We Did Have A Huge House Price Boom

There are lots of aspects of the performance of the Irish economy that people disagree about. However, I had been under the impression until this week that everyone agreed that Ireland experienced an exceptional increase in real housing prices in the during the period before the recession.

It turns out, however, that I was wrong. Not everyone agrees with this. Earlier this week, there was a discussion on this website of a paper by Carmen and Vince Reinhart, which reported some figures for real house price appreciation between 1997 and 2007.

Among the figures reported by the Reinharts on Table 4 of their paper were the following:

U. Kingdom +150.1pc
Spain +118.5pc
Sweden +114.9pc
Ireland +114.8pc
France +111.6

These figures have been debated elsewhere on this site but not in a way that would clarify the key fact. That Ireland really did have a larger increase in real house prices than these other countries is not that hard to check.

Here are the facts. The Department of the Environment reports that the average second hand house in the Republic of Ireland cost €102,711 in 1997 and cost €377,850 in 2007, an increase of 268%. The average value of the CPI increased by 42.4 percent between 1997 and 2007. So, from the DoE figures, we can calculate the real house price increase from 368 / 1.424 = 258. In other words, real Irish house prices rose by 158% from 1997 to 2007.  And, for what it’s worth, the real increase from 1995 to 2007 was 246%.

So, yes we really did have a huge house price boom. Certainly a boom that was bigger than occurred in Spain, Sweden or France. Morgan Kelly didn’t just make it up.

Cue comments from house price boom deniers, flat earthers and folks who believe Elvis is alive and living with Michael Jackson …

Frank Convery on ‘The Irish Economy’

Over at Comhar, Frank Convery has posted a detailed analysis of this Blog.

The fiscal multiplier varies over the business cycle

Alan Auerbach and Yurij Gorodnichenko have a nice piece over at Vox which reports empirical evidence that the size of the fiscal multiplier in the US is not constant over time, but varies over the business cycle. During good times, it is small — between 0 and 0.5 — while during recessions it is high — between 1 and 1.5. (During depressions it is even higher.) This is of course exactly what we teach our undergrads in standard macro courses (at least, I think of them as standard macro courses, but I guess not everyone agrees nowadays): here is more evidence consistent with those models.

Recessions are not a good time to have to cut government expenditure. They’re an even worse time to cut expenditure if you don’t have to.

The IMF and Fears of an Irish Default

The response to Brian Lucey’s article has been quite astonishing (over 300 comments at last count!).   Although clearly we don’t all agree, the debate has been enlightening – and entertaining – thanks to Brian and the many excellent participants on this site.

But with all the excitement over default, I think we passed over too quickly the important set of IMF fiscal policy papers that Philip linked to on Wednesday.   The papers provide a useful analytical perspective on Ireland’s fiscal challenge, which could frame a more productive discussion on fiscal (and indeed banking) policy.

Continue reading “The IMF and Fears of an Irish Default”