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Contents:

Vol 47, No 1, Spring (2016)

Table of Contents

Articles

ÉIRE Mod: A DSGE Model for Ireland
Daragh Clancy, Rossana Merola   1-31

Revisions to Macroeconomic Data: Ireland and the OECD
Eddie Casey, Diarmaid Smyth   33-68

Wagner in Ireland: An Econometric Analysis
Stephen Moore   69-103

Spillover in Euro Area Sovereign Bond Markets – Corrigendum
Thomas Conefrey, David Cronin   105-107

Policy Section Articles

Taxes, Income and Economic Mobility in Ireland: New Evidence from Tax
Records Data
Seán Kennedy, Yosuke Jin, David Haugh, Patrick Lenain   109-153

Searching for the Inclusive Growth Tax Grail: The Distributional
Impact of Growth Enhancing Tax Reform in Ireland
Brendan O’Connor, Terence Hynes, David Haugh, Patrick Lenain   155-184

Behavioural Science and Policy Network Meet-Up

Details of our 4th Irish Behavioural Science and Policy network meet-up are below. Sign up for the mailing list here. Sign up for the event itself here. Registration is free.

The fourth Irish Behavioural Science and Policy Network meet-up will take place on April 25th at 6pm in Dublin city centre (venue tbc). It will end at 8pm.  Each meet-up is structured around a collection of short talks, where each speaker describes briefly an idea they are working on (or thinking about), followed by questions, potential suggestions for collaboration between members, and a group discussion on the collection of talks.

This session will focus on applications of behavioural science to public policy. including health applications and the role of design principles. Speakers will include Dan Hayden from UCDClare Delargy from the BITEoin O’Malley from DCU and David Hevey from TCD.

All those interested are welcome to attend, so please do share this event information with anyone who you think would like to come along.

We look forward to seeing you on the 25th of April.

World university rankings

This is one way to try to boost your position in the world university rankings.

Another would be to shift admittedly very scarce resources from administrative to frontline staff, so as to keep class sizes under control; remember that the university’s core function was always to provide an excellent undergraduate education, and value those members of staff whose dedication made that possible; and value the outputs of research, instead of the financial inputs into it.

The ECB’s Inflation Target

The Eurozone HICP inflation index for February was at roughly the same level it had reached in the early months of 2012. That is to say the inflation rate has been essentially zero for four years.
The cumulative impact of this undershoot on the real burden of debt is getting to be very serious. The ECB’s own forecasts are for just 0.1% in 2016, 1.3% in 2017 and 1.6% in 2018, so they expect the undershooting to continue. By this time next year the price level will have been flat for five years. If GDP deflators had risen at 2% per annum for those five years various indebted countries would have knocked ten points off debt/GDP ratios, other things equal. So the ECB policy failure has consequences and has penalised the countries most heavily indebted.
Unlike the situation in the UK, the USA and other inflation-targeting countries there is not even a clear figure. The phrase (intoned at every Draghi press conference) is ‘below, but close to, 2%’. Why so coy? What does ‘close to’ actually mean? Will the 1.6% predicted for 2018 be deemed to have done the job?
The treaty talks only about price stability so the choice of target is entirely a matter for the ECB Governing Council. The tortured phraseology looks like a compromise – the sound money people getting the ‘below’ part and the rest getting the ‘but close to’. The 2% number had to get a mention, since various central banks had settled on an explicit 2% figure. It would hardly have been feasible to publicly declare a lower target number like 1% and would have had market repercussions. Whichever scribe came up with the form of words has hopefully been promoted.
Suppose the measures announced last week have their desired impact and Eurozone inflation reaches somewhere deemed ‘close to’ 2% in 2018. By that stage the heavily-indebted countries will have been short-changed substantially on real debt burdens. The remedy would be to raise the target, say to 4%, for five or six years in order to compensate, as Olivier Blanchard proposed when he was at the IMF. The indebted countries would be remiss not to push for this when the time comes, assuming the show is still on the road.