Central Bank /ESRI position: Joint Macro Modelling Project Manager

The Central Bank of Ireland (CBI) and the Economic and Social Research Institute (ESRI) plan to develop jointly a suite of modern macroeconomic/econometric models of the Irish economy as a basis for informing macroeconomic, monetary, financial sector and fiscal policy decisions.  This project is of critical importance to both organisations particularly in light of the current challenges facing the economy. The CBI/ESRI is seeking to appoint an individual to head a team of researchers to undertake this project.  This is an exciting opportunity with the successful candidate playing a central role in developing our understanding of the Irish economy as well as influencing domestic policy formulation at this critical juncture. The appointment will be initially for a three year period and the position could be filled on a secondment basis. Grade and salary will be commensurate with the skills, experience and qualifications of the successful candidate.  Appointment can be made up to Deputy Head of Function Level.

Details here.

28 thoughts on “Central Bank /ESRI position: Joint Macro Modelling Project Manager”

  1. Off-topic warning:

    @All

    Nomura’s Equity Strategy note has another excellent contribution from Richard Koo. Alphaville have bits of it here:
    http://ftalphaville.ft.com/blog/2012/08/30/1138781/converging-competitiveness-and-balance-sheet-recessions/

    and more behind the retail filter.

    I would recommend two things if you don’t read the whole thing.

    First, look at the graphs. His extrapolations of recent trends are only very indicative, but if the basic premise is correct you can expect Irish unit labour costs to decline by around another 10% ish before crossing those of Germany. How does Croke Park impact this?

    Second, I would second this:

    “That these nations’ economies have still not recovered is due to the fact that—with the exception of Greece—they are in balance sheet recessions, and the only way to address those recessions is to administer the fiscal stimulus that Germany so strongly rejects.

    Germany may be unable to accept the theory of balance sheet recessions until unit labor costs in the periphery drop to German levels. In other words, the pain in the eurozone is likely to continue until the competitiveness gap disappears and Germans realize the theory of balance sheet recessions is the only way to explain the continued economic slump.”

    @PRGuy

    Did I spot your bonkbuster in Easons the other day, Fifty Shady Grey-Market Deals or something?

  2. @grumpy

    More like 50 shades of white lies and grey areas to exploit!

    It will be a while before you see it in print. Christmas time possibly. I will no doubt give it a plug on IE when it gets there.

  3. Competitiveness is a red herring in the Euro crisis debate. Koo’s graphs show CHANGE in unit labor costs from 2000. They don’t show absolute levels. Dutch and German unit labor costs were and remain the highest in the EU. Unit labor costs in Greece and Ireland were rapidly catching up with those of Germany and the Netherlands in the 2000s, but they never surpassed them. A process of convergence was occurring, which was a central goal of EU policy. If a country already has a lower level, it can’t ever “drop to German levels.”

  4. @Geronimo

    Yes you are of course right, but if you will forgive the looseness of my language, picking a date like 2000 or Euro start-ish can be informative if you are willing to go with the idea that absolute convergence was never actually on the cards and the distortions to yields, credit growth etc of the last decade or more represent a big blip. Nothing in this stops you, if you want to, assuming that Ireland or Spain etc are on an inexorable march to eventual absolute convergence. Personally I am very skeptical – I can’t think what these economies can hang their hat on in order to sustain the ‘gains’ in ULCs made during the respective booms.

    Going back to 2000 and making (albeit sweeping) assumptions that peripheral economies had characteristics that were hard-wired into them then, and largely still do, is IMO a useful exercise.

    It would be interesting to pick a few starting dates going back much longer and see if the conclusions were similar.

    I would be interested in other views.

  5. @Grumpy/Geranimo

    “That these nations’ economies have still not recovered is due to the fact that—with the exception of Greece—they are in balance sheet recessions, and the only way to address those recessions is to administer the fiscal stimulus that Germany so strongly rejects.”

    I think Geranimo is right…competitiveness is a red herring. An article in the Wall Street Journal yesterday on large European firms attempting to raise funds in all corners of the world contained some alarming facts….. Bank lending to companies in the Eurozone so far this year is down 43% from a year ago, and has fallen 68% in five years. Dealogic is the data provider.

    If that trend continues then we are in for a rough ride. Maybe it’s time to batten down the hatches again.

  6. @Grumpy:

    With respect to Richard Koo, Ireland is not in a balance sheet recession: Ireland is in a balance sheet repression. This repression is given the title deleveraging, but repression it is.
    If the repression, so-called deleveraging, was eased up on it would certainly help.

    As for Croke Park:
    The GAA must surely be getting concerned. A name that had been synonymous with the best of that organization, has now become a byword for the divisive pampering of a cosseted elite within Irish society at the direct expense of increasingly marginalised people depending on services.
    Croke Park is shameful insult to a country that calls itself a republic.

    re: Multiplier Effect
    Apropos the subject of the thread, economic modelling, can I ask how these economic model adjust for the multiplier effect in a recession such as this. The multiplier effect is presumably entirely different from six or seven years ago.

    I am thinking particularly of capital intensive businesses, hotels for example, that manage to survive and make a little money. It is immediately taken by banks to pay down loans. The money received by these businesses does not even get to stage two in the multiplier process.

    There are several people now who no longer want to be paid via cheque or into their bank account. The reason now is not, unlike times past, the tax man. The reason is that any receipts to their bank account are of no benefit whatsoever to them, in terms of being able to spend the money. The money is taken by the bank, then presumably by another bank all the way to the ‘Bank in East’, exactly as described in Steinbeck’s ‘Grapes of wrath’.

  7. This has to be a record. A really important job, and right off the bat it descends into whining about the CPA. Well done I.ie

  8. @Fiatluxjnr

    “…competitiveness is a red herring”

    It might be pink anyway, but the point of Koo’s analysis that I think is sometimes missed is that in analysing the actual EZ situation and likely/unlikely responses to it, what really matters is whether the German swing voter, under the influence of the German opinion-former, thinks it is a Red, Pink or White herring.

    Koo and I seem to agree they think it is White, will continue to do so for some time, and will probably have to be proved at least partly wrong before changing their minds….unless maybe you can get the DAX below 3000 or so in the meantime.

  9. @GTFaway

    It is indeed an economically important job, but with apologies to Philip, this sort of stuff itself should be of considerable interest to those looking to fill it and to those applying.

  10. @GTFaway

    “This is an exciting opportunity with the successful candidate playing a central role in developing our understanding of the Irish economy as well as influencing domestic policy formulation at this critical juncture.”

    The Croke Park agreement is a very expensive and divisive piece of public policy right now. As the incumbent will influence public policy (as above), the position that any candidate holds on the Croke Park Agreement should be a matter of public record before being considered for the post.

  11. Without having looked behind the FT pay barrier …

    An obvious difficulty with Koo’s reported analysis when applied to Ireland’s case is that a large part of the fall in unit labour costs is a compositional effect that provides no benefit to competitiveness. Unless he has addressed this somewhere in his paper, what he has to say on Ireland is not worthy of much attention.

    One suspects that there might also be important compositional effects in other countries too. For example the principal root cause of compositional change in Ireland’s unit labour costs has been the collapse of employment in our construction sector, which has been mirrored in Spain.

  12. @Brian,
    Many thanks, but Koo’s article is in “The Long Room” on the FT site, which seems to be open only to finance professionals.

  13. @BeeCeeTee
    “For example the principal root cause of compositional change in Ireland’s unit labour costs has been the collapse of employment in our construction sector, which has been mirrored in Spain.”

    Perhaps. But I have the compositional on labour rates effects first hand.
    When short-time working is introduced, who gets put on short-time, the supervisor or the workers.
    When overtime is cut, whose overtime does the manager cut, the supervisor or the shop floor worker.
    For me, the compositional effect has both an hierarchical component and a class component, that spreads across all businesses and sectors, including the PS.
    Who for instance were the first to get laid off in the PS. Temporary and contract workers on lower levels of pay.
    Whose overtime is more likely to have been hit, the cop on the beat or the detective sergeant.

  14. We’re also going for the record for most consecutive comments bearing no relationship to the OP.

  15. a suite of modern macroeconomic/econometric models of the Irish economy as a basis for informing macroeconomic, monetary, financial sector and fiscal policy decisions. 

    Optics used to conjure up thoughts or images of science but in modern times the term has become part of the lexicon of spin – – a toxic art in which Irish policy makers excel.

    Is this the latest part of an architecture to impress external monitors or are we really interested in the truth or say near reality?

    Unless the Central Bank (and Patrick Honohan certainly knows the facts) and the ESRI are willing to challenge official spin and have staff look behind headline data, then these institutions will again not be acting in the public interest. They would again also be sustaining a fantasy that has destroyed the lives of tens of thousands of people during this brutal recession.

    At the MacGill Summer School last July, John Moran, the ‘new broom’ in the Department of Finance, gave no cause for optimism that enduring fairytales had been dumped on a bonfire of policy failures and orthodoxy.

    Data from the European Commission show that Irish unit labour costs – basically the labour cost per unit of economic output – are falling, in contrast to the increases being recorded in the rest of the euro area. Unit labour costs are estimated to improve by some 22 percentage points compared with the euro area over the period 2009-2013.

    Some years ago I was at a mass where the priest was earnestly talking about some prophet or chancer in the year 70 or 80 AD saying or doing something as if it was irrefutable fact. “God bless him, if he truely believes all that,” I thought to myself. So if Mr Moran believes the foregoing as representing near reality, I say: “God help us all!”

    So are we really interested in for example competitiveness indicators that are not based on hugely distorted headline data?

    How about the links between the export sectors and the domestic economy?

    About 9,500 direct Irish-based workers were responsible for €58bn of services exports in 2011 – – 73% of the total (Aviation leasing, Google, Microsoft, Apple, Dell, Oracle and Facebook).

    About 50,000 workers or 2.5% of the Irish workforce (including the unemployed) accounted for 69% of total exports (Over 40,000 staff were responsible for €56bn of chemical and medical devices exports).

    It would be a surprise if the culture of spin is challenged. It would also be in the public interest.

    Why is there so little said about the challenges in the medium to long-term?

    The government spin machine can brag about the creation of 20 or 30 jobs over 3 years but there is nothing of substance said about the jobs emergency.

    “Experientia does it — as papa used to say”

    http://www.finfacts.ie/irishfinancenews/article_1024185.shtml

  16. @ Michael Hennigan – Finfacts
    +1

    I keep thinking, why is noone saying, what now? Trickles of jobs from the multinationals, the entire consrtuction sector grinding to a halt, a ‘closed to the next generation’ sign up on the civil servies and a chunk of SMEs and their consumers loaded with property debt. Not to mention a few high hanging fruit budgets coming the way of our citizens. It’s like everyone’s in a holding position waiting for civil unrest.

    Lets hope Septmber/October gets use some good news on the debt front. Though I’m not exactly holding my breath.

  17. I’ll take that job. I’ll demonstrate with a simple elegant model that Ireland needs to cut out the quangos in the HSE and the bank formerly known as Anglo Irish Bank, ramp up NTMA sales starting at a valuation that is pessimistic of worth and growth and increase sale price by a small % every month, to encourage early buying. Repay only that which absolutely has to be repaid to the debt, and use the rest to increase gold reserves – minus a small amount (estimated % of gold inflation year on year) for stimulus for small and medium enterprise start-ups.

  18. @Joseph Ryan,
    The biggest compositional effect is that employment in low productivity, high unit labour cost, construction work has collapsed. This has driven average unit labour costs for the economy down without improving the competitiveness of other businesses. There have also been other shifts in the employment composition of the economy that have similarly reduced national unit labour costs without benefitting competitiveness.

    Another significant compositional issue is that the per-worker improvement in unit labour costs is not equal for different sectors. For example, a big fall in unit labour costs in pharmaceuticals has a significant impact on headline unit labour costs for the country, but has next-to-no impact on the competitiveness of other exporting industries.

  19. @Frank Galton

    “We’re also going for the record for most consecutive comments bearing no relationship to the OP.”
    True. And I am the most guilty. But tell me this; as we are on an economic models thread.

    What economic model was used by the HSE in its decision to cut home care hours and packages. Where is the cost / benefit analysis for this life or death decision in the State’s biggest employer and biggest spender.
    Why not simply give big bonus payments to HSE staff, based on a how quickly people died after leaving hospital. The quicker people died, the bigger the bonus. The Health expenditure problem would be sorted out in jig time; and the HSE staff would do even better! What more could one want.

    A more serious question that has to be asked. Why recruit anybody to the above role? Why have this job at all? What is the purpose of it? It is as plain as the nose on the incumbents face, what necessary decisions need to be taken on the fiscal front.
    The gilded pay, pensions and allowances of those on the upper echelons of the PS including politicians should be cut to the levels of other Irish mortals. We don’t need to pay people in Sligo or Leitrim to drive to Katmandu every month at a cost of €5,000 per month. They just need to get the train to Dublin a few days a week when the Dail is sitting.

  20. @ geronimo

    As JF suggests, it’s time to be alarmed.

    Angela Merkel is in China and at home, in a sign of challenges ahead, the sun maybe setting on Germany’s newest industry, solar/photovoltaics.

    This week a South Korean company acquired the collapsed German Q-Cells solar company. SolarWorld, another German firm, has petitioned the European Commission to impose EU anti-dumping duties.

    Problems can be easily explained away by blaming Chinese public subsidies but let he who has not sinned, cast the first stone.

    Danish wind turbine company Vestas is to cut an additional 1,400 jobs. The news comes after Vestas cut 2,335 jobs earlier in the year as a result of slowing sales.

    Recall the easy projections of green jobs from various Irish interests in the past decade.

    Competition is relentless in many sectors and emerging market companies are putting the heat on the developed world.

    If a country like a company does not do an honest, unvarnished SWOT analysis, it surely cannot be prepared for challenges ahead.

    That was the polite message I was sending!

  21. Why recruit anyone to the above role? Looking in from the outside, I see three reasons.

    1) Judged against outcomes, the quality of macroeconomic forecasting for Ireland has been woeful in recent years.

    2) The main existing macroeconomic model for Ireland – HERMES – is not exactly new and shiny. At a time when we have a lot of outside intervention in our economy, we are out of step in not having a well researched, sectorally based general equilibrium model for the country.

    3) Looking at the published work of the Fiscal Advisory Council, and more generally at what academic economists write here, it seems (to me at least) that the most knowledgable people have only a fairly hazy understanding of key aspects of how the Irish macroeconomy works today. An improved understanding of the macroeconomy could pay off in spades through better policy decisions by government and through better targeted interventions from the Troika.

  22. Given modern macroeconomic models do not incorporate banks, lending, and credit frictions this exercise promises to be another indulgent and costly waste of time, with no impact on actually policymaking, and failing to address the key issues facing the Irish economy

    One recalls JK Galbraiths observation that “Economics is extremely useful as a form of employment for economists”.

  23. @Georg R. Baumann

    “Unit labor cost change since 2008:

    http://www.spiegel.de/fotostrecke/grafiken-so-wettbewerbsfaehig-sind-die-euro-staaten-fotostrecke-85484.html

    Cost per unit went UP in Germany”

    That is captured in Koo’s graphs and it is the anticipated continuation of ULC increases in Germany that could, he argues, allow cost differentials between the periphery and core to be erroded away over the next few years to the point where Germany will be forced to recognise that there is much more to the post-bubble mess than just cost competitiveness.

    @All

    Again, this is slightly off-topic, but hardly irrelevant given the contrast between this from John McH the other week:

    “Maintaining public support depends on ensuring that the burden of adjustments are seen to be spread fairly, protecting the most vulnerable and ensuring that more powerful interests — not least in the public sector — do not succeed in pushing the heaviest burdens to the less well-organised, including younger generations.”

    …and this from today’s IT:

    “Of the eight cost-cutting proposals in the HSE plan outlined yesterday, at least three will affect older people or the disabled exclusively. Services for both groups are likely to be seriously affected by a 600,000-hour cut in home help hours, as well as a reduction of 200 home care packages and a €10 million reduction in hours for personal assistants for people who need high levels of support trying to live independently.

    Dr Reilly has consistently championed the care of patients in the community in preference to long-term stays in hospital, but advocacy groups predicted the effect of the cuts would be to increase hospital admissions.

    “If this culture of homecare cuts continues, children with life-limiting conditions will end up back in hospital unnecessarily, which nobody wants and which costs nine times more than homecare,” said Jonathan Irwin, chief executive of the Jack and Jill Foundation.

    The HSE said “the impact of these reductions will be minimised by ensuring that services are provided for direct patient care”.

    HSE performance director Laverne McGuinness said “home helps in some rural areas are now providing assistance to older people over the phone” rather than visiting in person.

    Groups working with older people sharply criticised the cuts. The Irish Senior Citizens’ Parliament said they could prove “the straw that broke the camel’s back” for many families coping with caring in the home.

    Older and Bolder described them as “tantamount to turning off the life support machine on services which were already thinly spread”. Home help services have already been cut by 500,000 hours earlier this year.

    But the HSE, which is currently running a €259 million deficit, insisted it had a legal obligation to remain within the budget targets set by the Government and the troika.

    Agency staff is being cut by 50 per cent and overtime by 10 per cent, while the removal of products such as glucosamine, a dietary supplement, from the medical card will save €6 million.”

  24. So : what i take from this thread is that the only model of the macroeconomy some will be happy with is one that contains a much reduced public sector wage bill (with the workers happy little cotton pickers as they are just keen as mustard to continue to work as hard, nay harder for the private sector who were of course blameless victims of the crash). Or am i misreading?

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