At last week’s Irish Economic Association conference, Mark Coughlan presented a paper analysing the text of successive Finance Ministers’ budget speeches, as evidence of shifts in policy emphasis, but also in the political economy and management of boom and bust economics. The slides are here and are worth a look.
Month: May 2014
There is quite a bit of momentum currently – and thankfully, given the severity of the housing crisis – in the whole area of housing, rising prices and rents, and the lack of supply in Ireland’s urban centres. I had thought pretty much everyone involved was agreed that a lack of supply was indeed the root cause of rapidly rising rents and prices.
Hence my despair at reading this article in today’s Irish independent: Easy mortgages for first-time buyers are on the way. Shifting out demand to encourage supply seems to me to be like adding fuel to the fire in the hope that the fire brigade are more likely to turn up. The losers will be the very people the policy aims to help, first-time buyers who will be given more credit to bid against each other.
What is particularly disheartening is that it comes so soon after Ireland tried this before and it went so spectacularly wrong – while house price growth from 1995-2001 was driven by a combination of factors (including incomes growing faster than supply), house price growth 2001-2007 was driven almost exclusively by easy credit and that was where the damage was done.
As per last night’s Prime Time, if you want housing to be affordable, increase supply – it’s no more complicated than that. If supply is not forthcoming, we need to understand why, rather than push the price of housing further up. My suspicion is the current lack of supply is down to a complicated and overly prescriptive system of planning and building controls, coupled with an array of developer contributions and levies which shift the burden from existing to new residents. This could be replaced with a unified land use policy and a simple land value tax.
As for policy in relation to loan-to-value, pick a number (like 80%) as the maximum loan-to-value for anyone and stick with it. That way at least, policy won’t be responsible for turning a house price upswing into another bubble.
Peter Spiegel launches a special FT series that looks back at 2011-2012 with this article.
TheJournal.ie reports on a speech given by President Higgins at the University of Chicago this evening.
PRESIDENT MICHAEL D Higgins has told students at the University of Chicago that the teaching of economics is going through “an intellectual winter” because it doesn’t take account of the social impacts of policy.
“The recent economic and financial upheavals have thrown a glaring light on the shortcomings of the intellectual tools provided by mainstream economics and its key assumption regarding the sustainability of self-regulating markets (and, more particularly, of largely unregulated global financial markets),” he told the assembly.
The prepared text for the speech is available on the President’s website. A recording of the actual delivery and subsequent Q&A session is available here.
The J.E. Cairnes School of Business and Economics, National University of Ireland, Galway (NUIG) is delighted to host the 11th Irish Society of New Economists (ISNE) Conference from the 4th to 5th of September, 2014. The deadline for online submission of abstracts (not exceeding 300 words) is 30th May, 2014. There will be two Plenary Sessions featuring distinguished academics: Professor Ciaran O’ Neill (NUIG) and Professor John FitzGerald (ESRI).
See here for further details.
We look forward to meeting you in NUI Galway.
The Local Organising Committee:
Ms. Michelle Queally, NUIG
Ms. Aine Roddy, NUIG
Ms. Patricia Carney, NUIG
Ms. Michelle Queally, NUIG
Ms. Aine Roddy, NUIG
Ms. Patricia Carney, NUIG
Dr. Aoife Callan, NUIG