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Back to School

Charlemagne article on the European agenda here.

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Economic Performance Unemployment

Good News on the Labour Market

The CSO released the results of the Quarterly National Household Survey for Quarter 2 2013 this morning, together with their population estimates for April of this year and the components of population change over the previous twelve months.

The news is mostly positive, showing clear evidence of a recovering labour market.

The level of employment has risen, with full-time employment up for the first time since 2008. Private sector employment is growing fairly strongly, offsetting the decline in public sector numbers.

Although still very high, overall unemployment is down and long-term unemployment has fallen as a proportion of the total.

The population increased only marginally between April 2012 and April 2013. The slowdown in population growth was due to (i) the continued high level of net emigration, with an increase in the outflow of Irish nationals, and (ii) a sharp fall in natural increase, due to the drop of almost 5% in the number of births.

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EMU

Thailand without the baht

“Thailand without the baht” is a useful way of thinking about the Irish economy’s boom, bust, and subsequent flat-lining, so it’s great to see that Paul Krugman is about to get his teeth stuck into the Asia-Euro comparison.

Some people argued in 1997/1998 that the crisis showed that the entire East Asian growth model was flawed. Whatever the benefits or costs of that model may have been, the subsequent rebound showed that these economies were still capable of delivering long run growth once their short run macro problems had been resolved. Seen from the inside the Irish growth model seems pretty rickety, but respectable if unexciting growth rates of the sort you see in countries close to the technological frontier should be attainable in the future once our own short run macro problems, and those of the Eurozone as a whole, have been resolved. Unfortunately this doesn’t seem to be on the horizon right now, which is why the “default and devalue” scenario has to be an option now in Greece, and may eventually come onto the policy agenda in other Eurozone periphery countries as well. The problem with the “short run” is that it can continue for an awfully long time unless corrective action is taken.

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Macro Vacancy at Nevin Institute

Details here.

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New Journal of Behavioural and Experimental Finance

Brian Lucey of this parish has launched a new journal of behavioural and experimental finance. He details this aims and objectives of the new journal here.

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National Skills Bulletin 2013

See here.

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DEW Conference 2013: Final Call

There are a few unfilled slots remaining for the Dublin Economics Workshop conference at the Castletroy Park Hotel, Limerick, on October 18-20 next. If you would like to present, send a brief outline and title asap to colm.mccarthy@ucd.ie.
Full programme and booking details will be issued early in September. The Dublin Economics Workshop is kindly sponsored this year by Dublin Chamber of Commerce.

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Jackson Hole 2013

The symposium papers are here.

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IMF on: Fiscal Adjustment; Construction Cycles

Two new IMF studies:

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Health and Recessions Again

Cormac O Grada recently blogged here about the link between recessions and health, citing a comment made by Brendan Walsh on an article in the BMJ.  Some more evidence in a couple of recent working papers.  One by Christopher Ruhm, who has written quite a lot on this topic (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2308256) and the other by authors from Georgia State University (http://ftp.iza.org/dp7538.pdf).  Both papers seem to suggest that the link between health (and health behaviours) and the economic cycle has become weaker in recent years, and at a macro level appears to be practically zero, though this masks some links for individual conditions.  This is not inconsistent with some of Brendan’s recent work for Ireland ( http://www.ucd.ie/t4cms/WP11_27.pdf) and some recent work which I did ( http://www.ucd.ie/t4cms/WP13_05.pdf, see tables 9 and 10 and figures 6 and 7) which indicate that the correlation between income and self-reported health appears to be weakening, particularly below the poverty line.  Following on from another recent post, the weaker link between health and income below the poverty line is not just because older people (who typically have poorer health) have seen their relative position improve during the recent recession.  The results also holds for under-65s.

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EM storms could spread to Europe

This FT article points out the potential impact of the shift in global bond markets for the euro periphery.

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Senior Economist Vacancy at IBEC

Details here.

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New Forecast Endorsement Function for IFAC

The MoU explaining how the process is here.

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WaPo: Can Ireland’s Celtic Tiger roar again?

Long article here.

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Inequality Social conditions

Thematic Report on the Elderly from the EU-SILC

The CSO release is here.

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Journal of Economic Perspectives (Summer 2013)

In addition to Kevin’s paper,  there are several others on the euro crisis.  In addition, there is a symposium on the “top one percent”.

All papers free online (or download the whole issue free): here.

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Austerity: Special Report

The Irish Examiner has been running a week-long series on austerity in Ireland – the various articles are available here.

My own contribution is here.

Categories
Economic history EMU

Cross of Euros

Alan Taylor and I have a new paper on the never-ending crisis in the Eurozone (and yes, the crisis is still with us, unless you regard mass unemployment as a matter of no concern, and has a way to run yet). It is available here.

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John Moran: “Alternatives to Austerity”

John Moran’s Macgill speech is here.

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IMF on Fiscal Councils

The IMF has released a couple of studies on fiscal councils:

Case Studies of Fiscal Councils – Functions and Impact

August, 2 2013

The Functions and Impact of Fiscal Councils

August, 2 2013

Categories
Banking Crisis Monetary policy Political economy Regulation

Restoring Confidence in the Financial System

Fiona Muldoon, Director of Credit Institutions and Insurance Supervision at the Irish Central Bank, gave a speech yesterday in Glenties at the MacGill summer school (h/t John Gallaher). The topic of the speech was “Restoring Confidence in the Irish Financial System.” Ms Muldoon gave a fairly upbeat assessment of progress. I am less sanguine. The problem is not lack of international confidence in Irish banks and businesses, but rather lack of international confidence in Irish financial regulation. It is still not clear if the Irish Central Bank has the backbone for the tough tasks it faces in the current environment.

It is important to remember that the weak regulatory stance of the Irish Central Bank during the credit bubble period was one of the chief causes of the Irish economic crisis. The Irish Central Bank’s soft and timid approach, and its willingness to be swayed by political and business interests, was a major cause of Ireland’s economic disaster (for evidence, see my paper with Brian O’Kelly). Has the Irish Central Bank sufficiently altered its approach?

The Irish Central Bank has reformed enough so that if the challenges of 2002-2008 ever reoccur, it will be ready for them. This new resolve to block credit bubbles is not likely to be tested for many decades. The Irish Central Bank needs to have the strength and fortitude to deal with the very different challenges of 2013.

The Irish Central Bank showed no leadership during the fiasco of the 2009 Land Reform Act/Dunne Judgement. The previous government (perhaps deliberately) slashed a gaping hole in Irish financial contract law when it passed the flawed 2009 Land Reform Act. The flaw was pointed out by Justice Dunne, and the judiciary reasonably expected that such an egregious flaw (called a “lacuna” in legal parlance) would be fixed by amending legislation. However the legal flaw was politically convenient since enforcing mortgage contracts would have been politically painful at the time. Ignoring the Dunne Judgement and leaving the flaw in place was very poor practice in terms of restoring international confidence in the Irish financial system, but it was politically convenient for a domestic audience. The government did nothing at all about this legal flaw, despite the obvious impact on Ireland’s international reputation.

It took outside interference by the Troika to get this legal flaw fixed. The Troika repeatedly noted the unacceptable situation in their quarterly reviews, and when government action was still not taken the Troika demanded that the Irish government act by an imposed deadline or face a cut-off in national debt funding. Throughout this long, confidence-draining saga, the Irish Central Bank stood meekly by and said nothing. A stronger-willed central bank (US, UK, Germany, others) would have been screaming from the rooftops about the need to fix such a gaping hole in the country’s financial contracting law.  It is not to the credit of the Irish Central Bank that we needed Troika intervention to get this problem acknowledged and fixed.

The Central Bank’s response, or lack thereof, to the explosive growth in mortgage arrears is another case where its stance was timid. Even by late 2011 it was obvious to hard-headed observers that some substantial fraction of the mortgage arrears explosion could be traced to strategic behaviour by households. Mentioning strategic default is offensive to many people since it means acknowledging that some Irish people are acting dishonestly in their own self-interest against the interests of society. A few people were brave enough to mention the obvious (take a bow, Karl Deeter!) but none at the Irish Central Bank. Up until early 2013, the Irish Central Bank effectively had a ban on any mention of strategic default by any central bank spokesperson. This gave rise to some stilted presentations, where Central Bank senior spokespeople railed about the explosion in mortgage arrears without any mention of one of the key causal factors. This omerta was finally broken by Patrick Honohan in early 2013. That was too late in the process to be an international confidence-booster. A strong imperative by the Irish Central Bank not to cause anyone any offence is not a good foundation for building international confidence in Irish financial regulation.

On the positive side, the Irish Central Bank’s actions against Quinn Insurance were tough and bold. So the bottom line is that in terms of restoring confidence the Irish Central Bank has a mixed record over recent years.

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Green Industrial Policy

Paper by Dani Rodrik here.

By the way,  Rodrik is now the Albert O. Hirschman Professor at the Institute of Advanced Studies.   I can recommend the new biography of Hirschman by Jeremy Adelman.

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QNHS: Effects of the Downturn on Households

See here.