The Irish public sector in European perspective

A Round-Table event organized by the Research Programme on Building State Capacity in Ireland, UCD Geary Institute for Public Policy

Phelan Room, National University of Ireland (NUI), 49 Merrion Square

Friday 23 January 2015

9:00-9:25 Registration
9.25 Welcome (Prof Niamh Hardiman, UCD)

Session 1
9.30-10.45 – Public sector reform: trends in Europe and elsewhere

Chair: Prof Niamh Hardiman, Director of the Public Policy Programme, UCD
Prof Edoardo Ongaro (Professor of International Public Services Management, Northumbria University and President of the European Group for Public Administration)

Responses

Robert Watt (Secretary General, Department of Public Expenditure and Reform) Dr. Muiris MacCarthaigh (Queen’s University, Belfast)
Dr. Richard Boyle (Institute of Public Administration, Dublin)

10.45-11.15 coffee

Session 2
11.15-12.30 – Delivering public services in new ways

Chair: Prof Philip O’Connell, Director, UCD Geary Institute for Public Policy
Prof Koen Verhoest, (Professorship of Comparative Public Administration and Globalization, University of Antwerp)

Responses

Prof Colin Scott (Principal of the College of Human Sciences, UCD)
Prof Tony Fahey (Vice-Principal for Research and Innovation, College of Human Sciences, UCD)

This event is supported by UCD Geary Institute for Public Policy.

Admission is are free but places are limited.

Please reserve a place by emailing geary@ucd.ie by 5pm on Friday 16 January 2015. Please indicate clearly whether you wish to attend Session 1, Session 2, or both:

Session 1, 9.30-10.45 – Public sector reform: trends in Europe and elsewhere Session 2, 11.15-12.30 – Delivering public services in new ways

Mario’s Twelve Days of Christmas by Gavin Kostick

Mario’s Twelve Days of Christmas.

On the first day of Christmas my true love sent to me
A printing press and lots of QE.

On the second day of Christmas my true love sent to me
Two percent inflation
And a printing press and lots of QE.

On the third day of Christmas my true love sent to me
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the fourth day of Christmas my true love sent to me
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the fifth day of Christmas my true love sent to me
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the sixth day of Christmas my true love sent to me
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the seventh day of Christmas my true love sent to me
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the eighth day of Christmas my true love sent to me
Eight bloggers blogging
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the ninth day of Christmas my true love sent to me
Nine bankers rigging
Eight bloggers blogging
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the tenth day of Christmas my true love sent to me
Ten pols a-fawning
Nine bankers rigging
Eight bloggers blogging
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the eleventh day of Christmas my true love sent to me
Eleven hawks a-crashing
Ten pols a-fawning
Nine bankers rigging
Eight bloggers blogging
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

On the twelfth day of Christmas my true love sent to me (altogether now)
Twelve doves a-flying
Eleven hawks a-crashing
Ten pols a-fawning
Nine bankers rigging
Eight bloggers blogging
Seven investors investing
Six left elections
Five percent unemployment!
Four quarters growth
Three Abe’s arrows
Two percent inflation
And a printing press and lots of QE.

A – printing press – and – lots of QQQQQ EEEEEE.

Another Trichet letter

To the Spanish Prime Minister in August 2011 (reply also published):

  • Publication: Letter from Jean-Claude Trichet, President of the ECB, and Mr. Fernandez-Ordonez to Mr. Zapatero, Prime Minister of Spain, on 5 August 2011


  • 19/12/2014 Publication: Reply from Mr. Zapatero, Prime Minister of Spain to Jean-Claude Trichet, President of the ECB, on 6 August 2011
     

 

Resolving Residential Mortgage Distress: Time to Modify?

New IMF WP by Jochen Andritzky here.

Summary: In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and declining consumption and incomes, leading to higher mortgage defaults and deeper recessions. In such situations, resolution policies may need to be adapted to help contain negative feedback loops while minimizing overall loan losses and moral hazard. Drawing on recent experiences from Iceland, Ireland, Spain, and the United States, this paper discusses how economic trade-offs affecting mortgage resolution differ in crises. Depending on country circumstances, the economic benefits of temporary forbearance and loan modifications for struggling households could outweigh their costs.

Economic and Social Review Winter 2014 Issue

Free online:

Articles

Maternal Country of Birth Differences in Breastfeeding at Hospital Discharge in Ireland PDF
Aoife Brick, Anne Nolan 455-484
Middle Class Squeeze? Social Class and Perceived Financial Hardship in Ireland, 2002-2012 PDF
Peter Mühlau 485–509
Testing the Permanent Income Hypothesis for Irish Households, 1994 to 2005 PDF
Petra Gerlach-Kristen 511–535

Policy Section Articles

Averting Crisis? Commentary from the International Institutions on the Irish Property Sector in the Years Before the Crash PDF
Ciarán Michael Casey 537–557
How Have Contracts for Difference Affected Irish Equity Market Volatility? PDF
Shaen Corbet, Cian Twomey 559–577
Telework Isn’t Working: A Policy Review PDF
Michael Hynes 579–602

 

CSO Data Releases

For the first three quarters of 2014 GDP is running 4.9 per cent ahead of the equivalent period in 2013. GNP is up 4.7 per cent on the same basis.  Quarter on quarter growth has slowed through the year though much of this is likely the result of distorting effects from the MNC sector.

The “contract manufacturing” effect that influenced the quarterly figures at the start of the year seems to have continued into Q3.  This seems to be supported by the Industrial Production data which includes this “contract manufacturing” effect and is highly volatile at the moment.  After rising by over 20 per cent in the first half of the year the volume of industrial production in manufacturing industries fell by 5 per cent in Q3 so remains at the elevated levels.  The figures show that the effect is arising in the pharmaceutical sector.

The Q3 balance of goods trade in the national accounts was around €3 billion higher than the balance shown by the Trade Statistics figures.  The difference was around €2.5 billion in Q2.

In the first nine months of 2013 the national accounting adjustments for goods trade resulted in a difference of just –€76 million between the trades balances recorded in the national accounts and trade statistics.  For the first nine months of 2014 the balance of goods in the national accounts is €7.9 billion greater than that shown in the trade statistics.

The current account of the balance of payments showed a massive surplus equivalent to 8.4 per cent of GDP in Q3.  This has been driven by an improvement in the merchandise balance (with no corresponding outflow on the services side) which is likely the result of the “contract manufacturing” effect discussed above.

It is possible (i.e. this is a guess) that the “contract manufacturing” effect is arising in an Irish-domiciled company.  If it was the Irish-resident branch of an MNC the profits would be recorded as an outflow in the BoP (and also for GNP) in the same quarter they are earned.  If it is an Irish-domiciled (or headquartered) company the profits would not be recorded as an outflow until a cash dividend is paid (assuming those dividends are paid to non-resident shareholders).  It is not appropriate to say that GNP excludes multinational sector profits.

[As an aside one might consider what impact, if any, these activities are having on Corporation Tax revenues.]

 

In November, consumer prices fell 0.3 per cent for the second month in a row (there was also a fall of 0.2 per cent in September).  Annual inflation is just 0.1 per cent.  Excluding energy products (-2 per cent) and mortgage interest (-12 per cent) inflation in the remaining 85 per cent of the index is around +1 per cent.

All charts from the CSO.

PIIE Briefing: Rebuilding Europe’s Common Future: Combining Growth and Reform in the Euro Area

Here.

Contents

Introduction
Adam S. Posen and Ángel Ubide

1 Stimulating Demand to Foster Structural Reform in the Euro Area
Ajai Chopra

2 The European Central Bank Must Act Aggressively to Restore Price Stability in the Euro Area
Ángel Ubide
Data disclosure: The data underlying this analysis are available here [xlsx].

3 Role of Fiscal Policy to Spur Growth in Europe
Paolo Mauro

4 An Agenda for Reform of the Euro Area Labor Markets
Jacob Funk Kirkegaard
Data disclosure: The data underlying this analysis are available here [xlsx].

5 Overhaul of EU Financial System Needed to Foster Growth
Nicolas Véron

Irish Economy Conference Feb 25: Save the Date

 On February 25th the fourth annual Irish economy conference, organised by the ESRI, UCD and University of Limerick, will take place. The venue is the Institute of Bankers. Details of the previous three events are below. A full programme and details of how to register will be provided shortly.
If you’d like to suggest sessions or speakers, please do use the comment box below.

The Distribution of Income in Ireland

The Department of Finance answered an Oireachtas question about the distribution of tax units (ie individuals or couples filing jointly) during the week with the following information

All income earners for Income Tax Year 2015 (provisional)

Range of Gross Income – € Number of Income Earners
0 to 9,000 368,585
9,001 to 12,000 107,297
12,001 to 15,000 116,836
15,001 to 20,000 213,112
20,001 to 25,000 216,626
25,001 to 30,000 201,085
30,001 to 40,000 324,506
40,001 to 50,000 229,709
50,001 to 60,000 157,805
60,001 to 70,000 107,045
70,001 to 80,000 77,378
80,001 to 100,000 91,301
100,001 to 120,000 47,956
120,001 to 150,000 34,809
150,001 to 200,000 22,512
Over 200,001 24,642
Total 2,341,203
The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2012 adjusted as necessary for income, self-employment and employment trends in the interim. These are, therefore, provisional and may be revised. It should also be noted that a married couple or civil partnership that has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Composition Effects and Loan-to-Value Limits

The Irish Central Bank is scheduled to introduce new macro-prudential risk controls on Irish mortgage lending, with the new regulations taking effect on January 1st or soon thereafter. One of the regulations will limit most new mortgages to an initial loan-to-value ratio of 80% or less. There has been considerable discussion of the effect of loan-to-value limits on potential property purchasers, but the analysis has been very poorly framed.

The budgeting scenario has been described as follows:

“Consider a couple who wish to purchase a €300,000 property. With a LTV limit of 80% this will require that they save €60,000 for the down payment whereas if they were allowed to borrow 85% they would only need savings of €45,000.”

This oft-repeated budgeting scenario misrepresents the nature of market-wide LTV limits imposed by the Central Bank. This budgeting scenario gives the impression that the policy decision is about imposing/not imposing the LTV constraint on only one particular buyer rather than market-wide. It misses the large compositional effects since leveraged property buyers compete with one another for properties. The degree of leverage allowed in the banking system feeds into property prices, and this affects the opportunity set of purchasers. Continue reading “Composition Effects and Loan-to-Value Limits”

Educational Reform and all that…

Educational reform and Junior Cert reform in particular has been getting a bit of coverage lately.  One observation which struck me was by Tom Collins, formerly Professor of Education at NUI Maynooth.  He mentioned anecdotal evidence claiming that primary school teachers could predict eventual secondary school educational outcomes from as early as six years of age.  Some recent work I did is consistent with this observation (http://www.ucd.ie/t4cms/WP14_20.pdf) .  Using Growing Up in Ireland data, I  looked at the scores of nine year olds in the Drumcondra maths and reading tests.  Children were partitioned into four groups on the basis of their mothers’ education.  Rather than looking at gaps in average outcomes for each group, I looked at gaps for selected percentiles.  This is in the spirit of John Romer’s analysis of inequality of opportunity, whereby between-group gaps calculated at the same percentile are regarded as having to some degree controlled for “effort” and the gaps can be regarded as reflecting ex post inequality of opportunity.  At the limit the gaps are about one standard deviation and are pretty constant across percentiles.  I also perform quantile decompositions for pairwise gaps and find that in general about one third to  one half of the gap is accounted for by observable characteristics (including school, class-size and teacher characteristics) with most of this “explained” gap arising from income and the number of books in the house.  Unobserved factors and “returns” to observed factors thus account for more than half the gaps.

The paper provides evidence that gaps in educational outcomes, on the basis of parental education, kick in at remarkably early ages.  It is also consistent with the idea that returns to education apply across as well as within generations.  There is a good recent review of this area by my colleague Paul Devereux here http://wol.iza.org/articles/intergenerational-return-to-human-capital.