Categories
Uncategorized

Bank funding costs: what are they, what determines them and why do they matter?

This new Bank of England primer is helpful in the context of the current concerns about the funding costs facing Irish banks – here.

Categories
Uncategorized

EC Assessments of Budgets

The European Commission have published their assessments of the draft budgets from the 16 eurozone countries covered by the assessment (programme countries Greece and Cyprus are not involved).  Of the 16, five were judged as “compliant” by the Commission (shown in green below).

A huge amount of material is available here.  For Ireland there is the:

The Commission have also published the Alert Mechanism Report as part of the Macroeconomic Imbalance Procedure. There is also the Statistical Annex from which Ireland’s scorecard is extracted here and shows four “imbalances” with house prices likely to add a fifth.  The “auxiliary indicators” may also be worth a glance.

This is still early days for the European Semester but at the moment it feels a little like a blizzard covering everything.  It seems to be designed on the maximin principle – by including everything they can’t be accused of missing anything.  The problem is that the important points may get lost in the noise.

Categories
Uncategorized

Fiscal Assessment Report, Nov. 2014

The latest IFAC report is here.

Categories
Uncategorized

Mental Health and Unemployment

I posted recently on the implications of the emerging literature on the economics of mental health in the Irish context. I am currently working on some projects looking at the role of mental health in life-long economic outcomes. One of the first papers from this project is below. It shows a substantial predictive effect childhood distress throughout childhood and adolescence on later trajectories of unemployment and also evidence that this becomes particularly marked during recessions. Apologies for self-promotion but I would like to flag an event we are running in Stirling on this topic on December 5th for which there are still places if people wish to attend. Also people interested in working on this area as a researcher or PhD student please feel free to get in touch.

 Childhood psychological distress and youth unemployment: Evidence from two British cohort studies

Mark Egan, Michael Daly, and Liam Delaney

AbstractThe effect of childhood mental health on later unemployment has not yet been established. In this article we assess whether childhood psychological distress places young people at high risk of subsequent unemployment and whether the presence of economic recession strengthens this relationship. This study was based on 19,217 individuals drawn from two nationally-representative British prospective cohort studies; the Longitudinal Study of Young People in England (LSYPE) and the National Child Development Study (NCDS). Both cohorts contain rich contemporaneous information detailing the participants’ early life socioeconomic background, household characteristics, and physical health. In adjusted analyses in the LSYPE sample (N = 10,232) those who reported high levels of distress at age 14 were 2 percentage points more likely than those with low distress to be unemployed between ages 16 and 21. In adjusted analyses of the NCDS sample (N = 8985) children rated as having high distress levels by their teachers at age 7 and 11 were 3 percentage points more likely than those with low distress to be unemployed between ages 16 and 23. Our examination of the 1980 UK recession in the NCDS cohort found the difference in average unemployment level between those with high versus low distress rose from 2.6 pct points in the pre-recession period to 3.9 points in the post-recession period. These findings point to a previously neglected contribution of childhood mental health to youth unemployment, which may be particularly pronounced during times of economic recession. Our findings also suggest a further economic benefit to enhancing the provision of mental health services early in life.

In the Irish context, the Growing Up in Ireland  study has been conducting research on children and adolescent welfare and health and will (subject to following the group up) be able to examine these findings in the Irish context. As said in the previous post, it is a good time to have a debate about the extent to which enough resources are invested in the development of children in Ireland early in life and particularly to examine outcomes such as resilience and mental health that have not traditionally crossed into economic analysis. The extent to which public investments in mental health remediation services throughout childhood and adolescence might produce a long-lasting flow of psychological and financial benefits is a question that has not been given a great deal of evidence-based debate in the Irish context (with notable exceptions including this excellent project by colleagues at UCD).  The emergence of large scale aging cohort study data in the form of the TCD-led TILDA project is another avenue that is starting to show the linkages between mental/physical well-being and economic outcomes throughout life.

Categories
Uncategorized

Post Programme Surveillance

Categories
Uncategorized

Research Assistant

UCC have a fixed-term position for a project on Cluster Mapping. Details here.

Categories
Uncategorized

2015 Annual Irish Economic Association Conference

The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. Edgar Morgenroth (Economic and Social Research Institute) is the local organizer.
The ESR guest lecture will be given by Professor Christopher Udry (Yale University) and the Edgeworth Lecture by Professor Giancarlo Corsetti (University of Cambridge).
The Association invites submissions of papers to be considered for the conference programme. Papers may be on any area in Economics, Finance and Econometrics.
The deadline for submitted articles is the 8th of February 2015 and submissions can be made through this site.

Categories
events Unemployment

Central Bank event: Labour Markets over the Business Cycle

The Central Bank is hosting a one-day conference on “Labour Markets over the Business Cycle” on 11 December in Dame Street (programme below). There is a limited number of places still available. If you wish to attend, please email ieaadmin@centralbank.ie by 9 December. Please note that places will be allocated strictly on a first-come-first-served basis.

Labour Market Adjustment over the Business Cycle

A one-day conference at the Central Bank of Ireland

11 December 2014
Liffey room, Dame Street, Dublin 2

email ieaadmin@centralbank.ie to confirm attendance by 9 December

   
Programme

 

11 December  
   
08:45 Registration and coffee
09:00 Opening remarks – “Prospects and Challenges for the Irish Labour Market 2015 – 2020”. John Flynn (Head of Irish Economic Analysis Division, Central Bank of Ireland).
   
Session 1 

09:20-11:00

Cycles in employment, unemployment and wages
  Labour market transitions in Ireland – Thomas Conefrey (Irish Fiscal Advisory Council)
  Wage Cyclicality – Mario Izquierdo (Banco de Espana)

 

11:00 Coffee & tea break
   
Session 2
11:15-13:00
Labour market attachment
  Are the marginally attached unemployed or inactive? – Martina Lawless (CBI/ESRI)
  Sources of wage losses of displaced workers – Pedro Portugal (Banco de Portugal)
   
13:00 – 14:00 Lunch
   
Session 3
14:00 – 15:45
Wage flexibility
  Wage flexibility in Ireland – Olive Sweetman (Maynooth University)
  Wage Setting – Flexibility and Rigidity in the UK since 1975 – Jennifer Smith (University of Warwick)

 

Session 4

15:45

Labour market adjustment during and after the crisis: the role of policies and institutions
  Pedro Martins (Queen Mary University of London)
  Questions & discussion

 

  Closing remarks

Conference Ends

Categories
Uncategorized

A Renewed Effort to Close Global Tax Loopholes Faces an Uphill Battle

NY Times article with interesting graphics here.

Categories
Economic history

Networks and economic history

Since Paul Krugman and others are talking about the role of networks in economic history, let me throw this classic paper by our own Morgan Kelly into the mix (thanks to David O’Donnell for the link to the ungated version).

Categories
Uncategorized

Tax Systems

The Fall 2014 issue of the Journal of Economic Perspectives is free to download here.

Especially topical are:

 

Zucman, Gabriel. 2014. “Taxing across Borders: Tracking Personal Wealth and Corporate Profits Journal of Economic Perspectives, 28(4): 121-48.

Abstract:

This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world’s personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.

Kleven, Henrik Jacobsen. 2014. “How Can Scandinavians Tax So Much? Journal of Economic Perspectives, 28(4): 77-98.

Abstract:
American visitors to Scandinavian countries are often puzzled by what they observe: despite large income redistribution through distortionary taxes and transfers, these are very high-income countries. They rank among the highest in the world in terms of income per capita, as well as most other economic and social outcomes. The economic and social success of Scandinavia poses important questions for economics and for those arguing against large redistribution based on its supposedly detrimental effect on economic growth and welfare. How can Scandinavian countries raise large amounts of tax revenue for redistribution and social insurance while maintaining some of the strongest economic outcomes in the world? Combining micro and macro evidence, this paper identifies three policies that can help explain this apparent anomaly: the coverage of third-party information reporting (ensuring a low level of tax evasion), the broadness of tax bases (ensuring a low level of tax avoidance), and the strong subsidization of goods that are complementary to working (ensuring a high level of labor force participation). The paper also presents descriptive evidence on a variety of social and cultural indicators that may help in explaining the economic and social success of Scandinavia.

Categories
Uncategorized

European integration and the Incompatibility of National Varieties of Capitalism

New paper from Aidan Regan (UCD) here.

Categories
Economic history

Why the Allies won WW1

The latest column in the VoxEU series on the economics of World War I is by Steve Broadberry, and is available here.

Categories
Uncategorized

More fishing expeditions into Ireland’s tax past?

Yesterday’s Sunday Business Post led with a story that the European Commission has started some “information gathering exercises” into tax arrangements put in place with MNCs in the 1980s and early 1990s.  The only company named in the piece is Pepsi.

There is a notable link between Pepsi and Apple.  John Sculley was vice-president of Pepsi from  1970 to 1977 and president from 1977 to 1983.  He was CEO of Apple from 1983 to 1993.  Last week he was in Dublin and gave an interview to RTE’s Science and Technology Correspondent, Will Goodbody.  The interview is available on this page and the relevant segment begins at around 08:45.  The short transcript and the rest of the post are below the fold.

Categories
Uncategorized

Household Indebtedness – Rhetoric and Action

Patrick Honohan’s speech to MABS event is here.

Categories
Bailout

Letters of November 2010

Jean Claude Trichet’s 19th November 2010 letter to “Tánaiste” Brian Lenihan is here.  Brian Lenihan’s reply.  It should be remembered that Gavin Sheridan has been to the fore in the efforts to get the Trichet letter published.

UPDATE: ECB page on this is here with lots of related information and material.

Categories
Uncategorized

Structural Reforms and Fiscal Policy: Lessons from Germany

Otmar Issing and Ludger Schuknecht explain in this WSJ oped that “Berlin’s pro-growth efforts in the early 2000s saved money rather than require extra spending” – here.

Categories
Uncategorized

Invitation to talk: Financial Crises: Lessons Learned and Financial Reform by René M. Stulz

The Financial Mathematics and Computation Research Cluster (FMC2) are pleased to invite you to attend the following topical talk by René Stulz, a member of our Scientific Advisory Board.

Financial Crises: Lessons Learned and Financial Reform
René M. Stulz, Chair of Banking and Monetary Economics, The Ohio State University
http://fisher.osu.edu/fin/faculty/stulz/

Date: Monday 17 November 2014
Venue: Institute of Banking, 1 North Wall Quay, Dublin1 (inside the Citi Building)
Time: 6:00pm – 7:00pm
Refreshments will be served from 5:30pm.

This event is free but for catering purposes please register using this link
or email irene.ward@ucd.ie

René M. Stulz Bio:

René M. Stulz is the Everett D. Reese Chair of Banking and Monetary Economics and the Director of the Dice Center for Research in Financial Economics at The Ohio State University. He has also taught at the Massachusetts Institute of Technology (MIT), the University of Chicago, and the University of Rochester.

René M. Stulz was the editor of the Journal of Finance, the leading academic publication in the field of finance, for twelve years. He is on the editorial board of more than ten academic and practitioner journals. He has published more than sixty papers in finance and economics journals. He is the author of a textbook titled Risk Management and Derivatives, a co-author of the Squam Lake Report: Fixing the Financial System, and has edited several books.

About FMC2:

The Financial Mathematics Computation Cluster (FMC2) is a collaboration between Industry, University College Dublin, Dublin City University, and NUI Maynooth. FMC2 is a Science Foundation Ireland funded Strategic Research Cluster (SRC). The cluster brings together complementary expertise in financial mathematics, financial economics and computer science to create a multi-disciplinary research programme in asset and risk management, areas that are of critical importance to the present and future development of the international financial services sector in Ireland. For further details see http://www.fmc-cluster.org/

Categories
Uncategorized

Euro Area Banking Supervision: Day One

Today is a red-letter day in the development of the euro area, with the ECB taking over responsibility for euro area banking supervision.  The new banking supervision website is here.

Categories
Economics

Potential output from a euro-area perspective

This ECB working paper is worth going through. The potential output calculation is very important for policy makers, because deviations from the economy’s potential output tend to form a large part of the evaluation of macroeconomic performance used by the European Commission and others. Two recent Central Bank working papers discuss the impact on the Irish economy of these measure. See here and here. The estimates have been, shall we say, fairly far off the mark. The chart below shows this. Understanding the potential output calculation is therefore really important when we talk about policy responses to changes in fiscal policy, especially at the EU level.

 

Categories
Banking Crisis

NYTimes Op-Ed on Mortgage Limits in the USA

There is an interesting New York Times Op-Ed article relevant to the proposed Irish Central Bank LTV and LTI caps on residential mortgages. US financial regulators attempted to impose very similar caps, but the caps have now been diluted/dropped in response to political pressure.

The article is behind the NYTimes paywall, but a number of articles can be read per month without paying a subscription. A key quote:

“low underwriting standards — especially low down payments — drive housing prices up, making them less affordable for low- and moderate-income buyers, while also inducing would-be homeowners to take more risk.”