Central Bank of Ireland: Financial Stability Notes

The Central Bank of Ireland has today published its first Financial Stability Note. This new series will cover financial stability related topics including those relating to risks and vulnerabilities facing the Irish and European financial system.

 

The Note, ‘Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017’, by Christina Kinghan, Paul Lyons and Elena Mazza, provides an overview of new residential mortgage lending in Ireland in 2017. It describes key loan and borrower characteristics of loans subject to the Central Bank’s Mortgage Measures along with a comparison to lending in 2016. The Note also provides details on loans with an allowance to exceed the loan-to-value (LTV) and loan-to-income (LTI) limits, as permitted under the Measures. 35, 472 new loans are examined, with a value of €7.4 billion.

 

The key findings of today’s Financial Stability Note are:

 

  • First-time-buyers (FTBs) in 2017 had an average LTV of 79.8% and an average LTI of 3 times gross income. This represents a marginal increase on the average LTV and LTI ratios reported in 2016. FTBs also had a larger loan size, property value and income compared to FTBs one year earlier (see Table 4).
  • The average loan size and property value of second and subsequent buyers (SSBs) also increased compared to 2016. The average LTV for SSBs in 2017 was 67.6% and the average LTI was 2.6 times gross income (see Table 5).
  • A higher proportion of loans for both FTBs and SSBs were originated on a fixed interest rate compared with one year earlier.
  • 17% of the aggregate value of SSB lending exceeded the SSB LTV limit.
  • 18% of new primary dwelling home (PDH) lending exceeded the 3.5 LTI cap. This corresponds to 25% of the value of FTB lending and 10% of the value of SSB lending. A larger share of LTI allowances was accounted for by FTBs (74%) relative to SSBs (26%).
  • Allowances to exceed the LTI and LTV caps were allocated to borrowers in all four quarters of 2017 (see Table 7).

Irish Postgraduate and Early Career Economics Workshop

See below for the programme for the return of the Irish postgraduate and early career economics workshop (previously “ISNE conference”). All are welcome to attend. Thanks to School of Economics in UCD for providing financial support.

Irish Postgraduate Early Career Economics Conference

UCD Geary Institute

Friday May 4th

9am to 915am: Opening Remarks: Professor Liam Delaney (UCD), Dr. Lisa Ryan (UCD), Dr. Ben Elsner (UCD), Dr. Michelle Queally

Session 1a: 915am to 1045am Session 1b: 915am to 1045am
Sanghamatira Mukrhrejee (UCD) “Factors influencing early electric vehicle adoption in Ireland”. Aine Doran (QUB) “Population Dynamics in 19th century Ireland”.
Bryan Coyne (TCD) “The impact of a subsidised weatherisation scheme on Irish domestic energy consumption”. Gayana Vardanyan (TCD) “The long-run impact of historical shocks on the decision to migrate: evidence from the Irish Famine”.
Martin Murphy (ESRI) “Predicting farm’s non-compliance with regulations on emissions of nitrates”. Man Wing (Lorraine) Wong (UCD) “The effect of language proximity on the labour market outcomes of the asylum population in Switzerland”.
10.45am  to 11am Coffee
Session 2a: 11am to 1230pm Session 2b: 11am to 1230pm
Florian Gerth (CBOI) “Entry and Exit Dynamics of UK firms in the wake of the Global Financial Crisis”.

Patrick McHale, BA  (NUIG) & Thomas Plunkett, B.Pharm (NUIG) “Healthy Eating Meal Plan Preferences Amongst a University Population: A DCE Approach”

Tammana Adhikari (UCD) “Deals versus Rules?”. Kenneth Devine (UCD) “Mortgage Choice and Expectations”.
David Jordan (QUB) “Doomed to decline?: Interwar industrial performance and policy in Northern Ireland”. Ivan Petrov (UCD) “Information Asymmetry, Split Incentives, and Energy Efficiency in the Residential Rental Market”.
1245pm to 130pm Lunch
Session 3a: 130pm to 3pm Session 3b: 130pm to 3pm
Dora Tuda (TCD) “Does higher unemployment increase income inequality: evidence from European labour markets using a discrete choice experiment”. Iordanis Parikoglou (UCD/Teagasc). “The impact of innovation on farm level productivity: evidence from the Irish dairy sector”.
TBC Stefano Ceolotto (TCD). “The impact of moral licensing on pro-environmental behaviours”.
Philip Carthy (ESRI) “Is employment growth affected by the introduction of broadband services?: Evidence from Ireland”. Linda Mastrandrea (UCD) “Linking retail pricing policy with the decarbonisation of the electricity sector”.
Coffee 3pm to 315pm
Session 4a: 315pm to 445pm Session 4b: 3pm to 445pm
Deirdre Coy (UCD) “Health formation in an RCT Early Childhood Visiting Programme”. Eoin Corrigan (UCD) “Capricious Redistribution: The Scale and Impacts of the Local Authority Rent Subsidy”.
Anne Devlin (QUB) “Why is work-limiting disability in Northern Ireland so high?”. Stephen Byrne (CBOI) “Solving the wage puzzle: Does the ‘nonemployment rate’ explain wage dynamics?”.

 

 

 

41st Annual DEW Economic Policy Conference

The Dublin Economics Workshop (DEW) is holding its 41st annual Economic Policy Conference in the Clayton White’s Hotel in Wexford on 14/15 September 2018.

At this stage, the DEW is inviting submissions on the following six topics:

  1. All-island economy
  2. Transport & infrastructure
  3. Higher education
  4. Diversity
  5. Behavioural economics – application to policy
  6. Housing supply

All speakers will be asked to present for 15 minutes each. While a paper is not mandatory, it is preferred. If you would like to submit, please send a short abstract (c.300 words) to sarah@dublineconomics.com by 5pm on Friday 11th May.

 

Revenue Annual Report 2017 and New Research

This morning Revenue published our Annual Report for 2017. The report contains lots of information on Revenue’s activities and outputs last year that contributed to the collection of €50.8 billion in net receipts for the Exchequer, as well as delivering on service to support compliance, the implementation of customs controls and facilitation of trade.

Also published today are a series of research papers that may interest readers of this blog:

Updated Corporation Tax research profiles tax payments received in 2017 as well as analysis of 2016 tax returns. This includes significant new analysis of multinational companies in Ireland.

An analysis of Income Dynamics and Mobility based on Revenue micro data. This examines the distribution of incomes by decile and percentile as well as tracking mobility of income earners over time.

Profiles of Excise Duty and Capital Taxes receipts. Excise, Capital Acquisitions Tax , Stamp Duty, Capital Gains Tax and Local Property Tax cover wide ranging activities, transactions and products. The profiles document these in detail and show changes in core components in recent years.  For the first time, information on capital taxes are combined together with location and earnings data to present new perspectives on the taxes.

Revenue’s latest customer survey, of small to medium sized enterprises in 2017, is Revenue’s fourth SME survey. Responses show that customer satisfaction with Revenue service remains high across a range of headings. The survey also includes a behavioural experiment to test the impact of personalisation on response rates.

Also published is the annual illegal tobacco survey results for 2017 and the first quarterly Local Property Tax statistics for 2018.

 

Bringing the Household Back in: Comparative Capitalism and the Politics of Housing Markets

Some readers might be interested in this new working paper at UCD’s Geary Institute. http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201807.pdf

The core argument is that to understand heterogeneity in house price inflation, it is vital to understand the interactive dynamics in two markets that determine homeownership: First, the labor market, which shapes households’ incomes and; second, the market for mortgages, which shape households’ access to credit financial resources.

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SSISI Annual Symposium – Ireland 2040

The Statistical and Social Inquiry Society of Ireland will host its annual symposium this Thursday, 26th April 2018 at 5:30pm, in Chartered Accountants House, 47/49 Pearse Street, Dublin 2.

The topic of the symposium is: ‘Where’ will the Economy be in 2040? Delivering on the National Planning Framework

Speakers include:

  • Professor Henry Overman, London School of Economics and Director of the What Works Centre for Local Economic Growth
  • Paul Hogan, Senior Adviser at Department of Housing, Planning & Local Government and project manager for the National Planning Framework
  • Dr. Ronan Lyons, Assistant Professor of Economics at Trinity College Dublin

As ever, non-members are welcome to attend and participate in the discussion.

IEA 2018 – Preliminary Programme

IEA 2018. May 10 and 11 at the Central Bank’s headquarters in North Wall Quay. Please note Early Bird registration is open until April 25.

DAY 1: THURDSAY MAY 10TH 2018

Registration: 8:30-9:00

Session 1: 9:00 to 10:30

1A          Public Economics (1)

·        Respect your elders: evidence from Ireland’s R&D tax credit reform (Rory Malone, UL)
·        Paying over the odds at the end of the fiscal year: Evidence from Ukraine (Margaryta Klymak, TCD)
·        The Direct and Spillover Effects of Taxation: Evidence from a Property Tax Break for First-Time Buyers (Enda Hargaden, Univ of Tennessee)
·        Follow the Leader? The Interaction between Public and Private Sector Wage Growth in the UK (Arno Hantzsche, NIESR)

 

1B          Financial Economics (1)

·        Positive Liquidity Spillovers from Sovereign Bond-Backed Securities (Peter Dunne, CBI)
·        A Multi-Century Perspective on Return Predictability and Price Bubbles (Don Bredin, UCD)
·        Regulatory Penalties and Reputational Risk: Evidence from Systematically Important Financial Institutions (Sharadha V Tilley, DIT)

·        Resolving a Non-Performing Loan crisis: the ongoing case of the Irish mortgage market (Fergal McCann, CBI)

 

1C          Economics of Health and Education

·        The Human Capital Cost of Radiation: Long-Term Evidence from outside the Womb (Benjamin Elsner, UCD)
·        School Tracking and Mental Health (Mika Haapanen, Univ of Jyväskylä)
·        Household Decision Making with Violence: Implications for Transfer Programs (Alejandra Ramos, TCD)
·        Heterogeneity in Early Life Investments: A Longitudinal Analysis of Children’s Time Use (Slawa Rokicki, UCD)

 

Coffee: 10:30 to 11:00

Session 2: 11:00 to 12:30

2A          Economic History (1)

·        Rise and Fall in the Third Reich: Social Mobility and Nazi Membership (Alan de Bromhead, QUB)
·        The Economic Geography of Late Industrialisation: Local Finance and the Cost of Distance in Imperial Russia (Marvin Suesse, TCD)
·        Perfect Mechanics: Artisan Skills and the Origins of the Industrial Revolution. (Morgan Kelly, UCD)
·        Economic Policy and the Common Good (Rowena Pecchenino, NUIM)

 

2B          Applied Micro (1)

·        Determinants of households’ switching demand and execution (Shane Byrne, CBI)
·        The Take-Up of Medical and GP Visit Cards in Ireland (Claire Keane, ESRI)
·        Dodging the deadweight death-spiral: Efficiency and equity implications of UK electricity tariff reform (Niall Farrell, Univ of Oxford)
·        The education, work and fertility decisions of women (Barra Roantree, IFS)

 

2C          Monetary Policy and Asset Pricing

·        Monetary Policy Shocks and Bank Lending: Evidence from the euro area and United States (David Byrne, CBI)
·        The political economy of reforms in central bank design: evidence from a new dataset (Davide Romelli, TCD)
·        Commodity pricing: Evidence from Rational and Behavioural Models (Don Bredin, UCD)

 

Lunch: 12:30 to 13:30

Session 3: 13:30-15:00

3A          Economic History (2)

·        Patent Costs and the Value of Invention: Explaining Patenting Behaviour between England, Ireland and Scotland, 1617-1852 (Stephen Billington, QUB)
·        The Impact of the Great Irish Famine on Irish Mass Migration to the USA at the turn of the twentieth century. (Gayane Vardanyan, TCD)
·        The impact of depression and deglobalization on agricultural outcomes: Insights from interwar Ireland (Tara Mitchell, TCD)
·        Poverty and Population in Pre-Famine Ireland (Alan Fernihough, QUB)

 

3B          Multinational Firms

·        America First? A US-centric view of global capital flows (Martin Schmitz, ECB)
·        Corporate Taxation and the Location Choice of Foreign Direct Investment in the EU Countries (Iulia Siedschlag, ESRI)
·        U.S. corporate income tax cuts: Spillovers to the Irish economy (Daragh Clancy, ESM)
·        The contribution of foreign companies to the business economy and corporate income tax base in Ireland (Seamus Coffey, UCC)

 

3C          Financial Economics (2)

·        Clearinghouse-Five: Determinants of voluntary clearing in European derivatives markets (Pawel Fiedor, CBI)
·        The Implications of Tail Dependency for Counterparty Credit Risk Pricing (Juan Carlos Arismendi Zambrano, NUIM)
·        Money Market Funds and Unconventional Monetary Policy (Jacopo Sorbo, CBI)
·        What ‘special purposes’ explain cross-border debt funding by banks? Evidence from Ireland (Eduardo Maqui, ECB)

 

Coffee: 15:00-15:30

Session 4: 15:30-16:45

4A          Macroeconomics of the Irish economy

·        Disentangling Credit Shocks in the Irish Mortgage Market (Michael O’Grady, CBI)
·        Inside the “Upside Down”: Estimating Ireland’s Output Gap (Eddie Casey, IFAC)
·        Modelling External Shocks in a Small Open Economy: The Case of Ireland (Graeme Walsh, CBI)

 

4B          Labour Economics (1)

·        Employment and Hours Impacts of the National Minimum Wage and National Living Wage in Northern Ireland (Duncan McVicar, QUB)
·        Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland (Paul Redmond, ESRI)
·        Taxpayer Responsiveness and Statutory Incidence: Evidence from Irish Social Security Notches (Enda Hargaden, Univ of Tennessee)

 

4C          Measurement & Methods

·        Macro and Micro Estimates of Irish Household Wealth (Mary Cussen, CBI)
·        New Characteristics and Hedonic Price Index Numbers (Peter Neary, Univ of Oxford)
·        Patterns of Firm Level Productivity in Ireland (Luke Rehill, DoF)

 

17:00-19:00

Economic and Social Review Guest Lecture: Professor Wendy Carlin (University College London and the CORE Project)

19:30 Dinner at ELY IFSC, CHQ Building
DAY TWO: FRIDAY MAY 11TH

Session 5: 9:00-10:30

5A          Macroeconomic Modeling

·        Shadow Bank run: The Story of a Recession (Hamed Ghiaie, Universite de Cergy-Pontoise)
·        Real exchange rate dynamics in New-Keynesian models – The Balassa-Samuelson mechanism revisited (Maren Brede, Humboldt-Universität zu Berlin)
·        Factor Misallocation and Adjustment Costs: Evidence from Italy (Robert Goodhead, CBI)
·        The Effect of Rents on Wages when Labour is Mobile Across Regions (Matija Lozej, CBI)

 

5B          Banking

·        EU banks and profit shifting: preliminary evidence from country-by-country reporting (Wildmer Daniel Gregori, EC)
·        Cross-border banking in the EU since the crisis: what is driving the great retrenchment? (Lorenz Emter, CBI)
·        Banking crises and investments in innovation (Oana Peia, UCD)
·        Pockets of risk in European housing markets: then and now (Jane Kelly, CBI)

 

5C          Agriculture & natural resources

·        Sea bass angling in Ireland: a structural equation model of catch and effort (Gianluca Grilli, ESRI)
·        Understanding Farmer’s Valuation of Agricultural Insurance: Evidence from Viet Nam (Anuj Singh, TCD)
·        Accounting for technology heterogeneities and policy change in farm level efficiency analysis: an application to the Irish beef sector (Maria Martinez Cillero, ESRI)
·        The impact of residential ‘weatherisation’ schemes on the domestic energy consumption of Irish households (Bryan Coyne, TCD)

 

Coffee: 10:30-11:00

Session 6: 11:00 – 12:30

6A          International Trade

·        The Heterogeneous Impact of Brexit: Early Indications from the FTSE (Ron Davies, UCD)
·        Research Dissemination, Distance and Borders (Lukas Kuld, TU Dortmund)
·        What’s Another Day? The Impact of Non-Tariff Barriers on Trade (Jonathan Rice, Central Bank)
·        Imported Intermediate Goods and Incomplete Exchange Rate Pass-Through into Export Prices (Alexander Firanchuk, TCD)

 

6B          Macroprudential Policy

·        An Early Warning System for Systemic Banking Crises – A Robust Model Specification (Michael Wosser, CBI)
·        The effectiveness of macroprudential policies in the euro area (Eóin Flaherty, CSO)
·        Macroprudential Policy, Uncertainty and Household Savings Behaviour (Conor O’Toole, ESRI)
·        Credit Booms, Macroprudential Policy and Financial Crises (Peter Karlström, Univ of Bologna)

 

6C          Political Economy & Institutions

·        Ebola, Resistance and State Legitimacy (Matthias Flueckiger, QUB)
·        Does Corruption Ease the Burden of Regulation? National and Subnational Evidence (Robert Gillanders, DCU)
·        Can labour market institutions mitigate the China Syndrome? Evidence from regional labour markets in Western Europe (Jan-Luca Hennig, TCD)
·        Refugees, migrants and the right-wing vote share: evidence from Sweden (Rachel Slaymaker, ESRI)

 

Lunch: 12:30-13:30

Session 7: 13:30-15:00

7A          Econometrics and Forecasting

·        Forecasting with FAVAR: Macroeconomic versus Financial Factors (Alessia Paccagnini, UCD)
·        Forecasting Irish Inflation after the crisis: Evaluating Multiple Bayesian Approaches (Shayan Zakipour-Saber, CBI)
·        Model Averaging in a Multiplicative Heteroscedastic Model (Alan Wan, City Univ of Hong Kong)
·        Phillips curves in the euro area (Laura Moretti, ECB)

 

7B          Macro-finance

·        Financial Crises, Macroeconomic Shocks, and the Government Balance Sheet: A Panel Analysis (Matteo Ruzzante, Universidade Nova de Lisboa)
·        Is Macroeconomic Uncertainty or Policy Uncertainty Priced in UK Stock Returns? (Jun Gao, UCC)
·        Eurobonds: A Quantitative Analysis of Joint-Liability Debt (Vasileios Tsiropoulos, CBI)
·        Constructing A Financial Conditions Index for the United Kingdom: A Comparative Analysis (Sheng Zhu, UCC)

 

7C          Applied Micro (2)

·        Crime Highways: the Effect of Motorway Expansion on Burglary Rates (Kerri Agnew, TCD)
·        Consumer Switching in European Energy Markets: A Comparative Assessment (Jason Harold, ESRI)
·        Expectations of future care needs and wealth trajectories in retirement (Rowena Crawford, IFS)
·        Expected Child Mortality, Fertility Decisions, and the Demographic Dividend in Low and Middle Income Countries (Mark McGovern, QUB)

 

Coffee: 15:00-15:30

 

15:30-17:15

Edgeworth Lecture: Professor Olivier Blanchard (MIT and Peterson Institute for International Economics)

 

17.30

Irish Economic Assocation AGM