Latest edition of Economic and Social Review now out

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Vol 47, No 1, Spring (2016)

Table of Contents


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

5 replies on “Latest edition of Economic and Social Review now out”

The taxes, income and economic mobility paper is an excellent addition to the policy debate and provides comprehensive and compelling evidence supporting previous OECD research which showed that the so-called ‘market’ distribution of income in Ireland (in effect the pre-tax, pre-transfer distribution) is the most unequal in the OECD but that the tax and welfare systems generate a post-tax, post-transfer distribution is actually a tad more equal than the OECD average.

Unfortunately, this is likely to provoke the usual dialogue of the deaf between the usual cabal of disingenuously or deludedly outraged left-wingers and the “serious and sensible” people embedded in the establishment that will generate quite a lot of heat and no light.

Both sides, of course, are determined to distract attention from consideration of why the “market” distribution of income is so unequal and why the tax and welfare system has to work so hard to achieve a more equal post-tax, post-transfer distribution.

The rent-seeking and inefficiencies that contribute to generating this grossly unequal market income distribution are endemic and pervasive across the upper reaches of the political and economic spectrum. Therefore it is not surprising that, while lip service is paid – and some participants can wax eloquent and lyrical, there is a determination across the board to ensure the scope and enforcement of competition law, of consumer protection and economic regulation are designed to benefit the rent-seekers at the expense of the vast majority of citizens. Ireland is not unique in this respect; it is a malaise that is afflicting all the advanced economies and is contributing to the current “secular stagnation”. It is simply that Ireland provides the most egregious example.

Re the DSGE model

The model imposes parameters , based on long run averages. That means. however, that they bear little relation to the economy now. Consumption, for example, is put at 64% of GDP as against the current 43% reading, while exports are now 120% of GDP as opposed to 70% in the model.

Such models also need a financial sector and a housing sector, the latter extremely important in Ireland. It is also interesting that models in general cannot capture directly the impact of ‘structural reforms’ and when proxies are employed, such as lower wage mark ups in this case, the impact is very limited.

A DSGE model for Ireland. I bet it doesn’t model the impotence of new debt, the death of the Phillips curve or the role of the 0.01% in steering cash flows to themselves high above the system logic of the models beloved of economists and other FIRE professionals. The Fed’s DGSE model has predicted inflation in 90 of the last 91 months of stagnation . How to model the fact the system is rigged. Better not to. The purpose of the model is to sharpen the questions but this is not an age of questions.

The Rosary would be preferable to a DSGE model because it would be more likely to have a placebo effect LOLZ. Even homeopathy would be better. The memory of water trumps the memory of growth.


how would a DSGE model cope with structural reforms on top of wage stagnation and growth stagnation due to the global economy having exceeded its debt capacity ? The factors that drove historic performance no longer work. I have never seen this modelled coherently

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