Updates, both trivial and important

The blog has gotten some updates to its backend and theme, but more importantly, the blog has a new editor, UCC’s Seamus Coffey. Welcome Seamus!


Fiscal Council Webinar

The Fiscal Council’s latest Fiscal Assessment Report, May 2020: “The Fiscal Impact of Covid-19” is out today. This is the Council’s 18th Fiscal Assessment Report, and it comes at a time when the economy is experiencing an unprecedented shock due to the pandemic and very high uncertainty. The Report assesses the economic and fiscal consequences, including a range of possible scenarios to 2025 and an assessment of the policy consequences.

The Council will be hosting a live webinar on the findings of the report on Thursday, 28 May 2020 @ 2pm Dublin time. The Council’s Acting Chairperson, Sebastian Barnes, will give a presentation followed by a Q&A session. The presentation is expected to last 30 minutes.

You can register at:


Travel and Tourism in a Post Covid Society – TRiSS Summer Series

Trinity Research in Social Science (TRiSS), in partnership with its member schools and disciplines, is organising a weekly series of online events, over the summer, on how covid19 will change society. Each week, experts from Trinity and other leading institutions around the world will be bringing their insights on how covid19 is likely to change our lives – from corporate power and climate change to civil liberties and the future of tourism & travel.

The second event – “Travel and Tourism in a Post Covid Society” – takes place on May 26th at 11am (Irish Standard Time) and is co-hosted with the Trinity Business School. As one of the world’s biggest industries, the tourism sector is facing massive repercussions from the Covid health crisis and the associated lockdown measures. Not only is it one of the hardest hit sectors, it could be the one slowest to recover from the upcoming economic recession. This timely discussion features a range of international experts.

Attendance is free but requires registration via Eventbrite. The webinar will last 75 minutes, with three 15-minute presentations and a moderated discussion afterwards. Participants include:

  • Brian Lucey from Trinity College
  • Denise O’Leary from Technological University Dublin
  • Brent Ritchie from the University of Queensland
  • Jane Ali-Knight from Edinburgh Napier University

Denise O’Leary is Assistant Head of School of Hospitality Management and Tourism in Technological University Dublin. She has extensive experience as a manager, lecturer and researcher in third level institutions in Ireland and the US and over 10 years of experience as a consultant in the private sector. One focus of her academic research is on collaboration at both an organisational and inter-organisational level and she explores collaboration in networks, including food tourism networks. She is also interested in tourism skills development. She is currently involved in the Next Tourism Generation Alliance project, an EU funded project which includes education, training and industry partners from across Europe and is tasked with developing a Blueprint for addressing skills needs in the European tourism sector.

Ritchie Brent has coordinated several research projects including Sustainable Tourism CRC and consultancy work for a number of tourism organisations in the public and private sector in Australia, England, Vietnam and New Zealand. His research interests are associated with tourism risk management. His research has focused on understanding risk from an individual and organisational perspective. His work on organisations explores risk attitudes and response strategies to effectively respond and recover from crises and disasters. He also explores tourist attitudes to risk and their risk reduction behaviour, including beach goers, Australian outbound travellers and potential travellers to the Middle East and in Indonesia.

Jane Ali-Knight is currently leading and developing the festival and event subject group as well as lecturing at Universities internationally and facilitating training and development in the field. She is Course Director of the highly successful ‘Destination Leaders Programme’ delivered with Scottish Enterprise. Her core activities fall into three main areas: event and festival related programmes; research and publications and conferences and professional events. She is currently a board member of BAFA (British Arts and Festivals Association); Without Walls; Women in Tourism; Hidden Door Festival and is a Fellow of the HEA and Royal Society of the Arts.

Chairing the session will be Brian Lucey. He is Professor of Finance at the School of Business, Trinity College Dublin. A graduate of TCD with a First Class degree in Economics in 1984, Professor Lucey has worked as a statistician in the Department of Health and as an Economist in the Central Bank, prior to joining TCD. He has studied at graduate level in Canada, Ireland and Scotland, and holds a PhD from University of Stirling.


Covid19 and a Changing Society – TRiSS summer series

Trinity Research in Social Science (TRiSS), in partnership with its member schools and disciplines, is organising a weekly series of online events, over the summer, on how covid19 will change society. Each week, experts from Trinity and other leading institutions around the world will be bringing their insights on how covid19 is likely to change our lives – from corporate power and climate change to civil liberties and the future of tourism & travel.

The first event – “COVID-19 and the Future of Cities” – takes place on May 18th at 3pm Irish Standard Time and is co-hosted with the Department of Economics at Trinity College Dublin. Attendance is free but requires registration via Eventbrite. The webinar will last 75 minutes, with three 15-minute presentations and a moderated discussion afterwards. Participants include:

  • Prof. Edward Glaeser, Harvard University
  • Prof. Jessie Handbury, University of Pennsylvania
  • Prof. Diego Puga, CEMFI
  • Prof. Martina Kirchberger, Trinity College Dublin, as chair

Edward Glaeser is the Fred and Eleanor Glimp Professor of Economics in the Faculty of Arts and Sciences at Harvard University, where he has taught since 1992. He has published dozens of papers on cities economic growth, law, and economics. In particular, his work has focused on the determinants of city growth and the role of cities as centers of idea transmission. He received his PhD from the University of Chicago in 1992. Some of his recent work examines how COVID-19 has affected small businesses.

Jessie Handbury is an Assistant Professor of Real Estate at the Wharton School in the University of Pennsylvania. She completed her BA and PhD at Columbia University and was selected as a NBER Faculty Research Fellow, International Trade and Investment. Her research interests lie at the intersection of urban economics, trade, and industrial organization. She has developed an exposure index based on smartphone app location data to help analysis during the current pandemic.

Martina Kirchberger is an Assistant Professor at Trinity College Dublin. She is a development economist with a particular interest in urbanization, infrastructure, the construction sector, labor markets, and spatial mobility. Previously, she was an Earth Institute Post-Doctoral Research Fellow at Columbia University. She received her DPhil in Economics from the University of Oxford in 2014. Some of her ongoing research examines the labor market effects of COVID-19 on low-skilled urban workers.

Diego Puga is Professor of Economics at CEMFI, in Madrid, Spain. His research interests include urban economics, economic geography and international trade. Born in Spain, where he completed his undergraduate degree in Economics, he obtained his Ph.D. in Economics from the London School of Economics in 1997. He is member of the Multidisciplinary Workgroup advising the Spanish government on scientific issues related to COVID-19 and its future consequences.


Understanding the Covid19 pandemic and its consequences [SSISI online event, May 21]

The Statistical & Social Inquiry Society of Ireland invites you to attend a special Symposium on the covid19 pandemic, at the seventh and final Ordinary Meeting of its 173rd session. The meeting takes place online, at 4.30pm on Thursday May 21st.

The theme for the special symposium is “Understanding the Covid19 pandemic and its consequences” and its aim is to provide views from a number of different perspectives on the covid19 pandemic and what it means for policymakers and wider society. The symposium will be chaired by Society President Danny McCoy and will comprise six short contributions of no more than ten minutes, followed by a general discussion:

  1. Catherine Comiskey (Trinity College Dublin), “The epidemiology of Covid-19: Learning from the past and modelling for the future”
  2. Jean Acheson (Revenue Commissioners), “The impact of covid19 on income and employment: early evidence from administrative data”
  3. Reamonn Lydon (Central Bank of Ireland), “Measuring the economic impact of covid19 in real time”
  4. Conor Lambe (Danske Bank), “Covid19 and the Northern Irish economy: initial insights”
  5. Shana Cohen (TASC), “What has Covid-19 told us about inequality in Ireland?”
  6. Gerard Brady (Ibec), “Business in a compressed economy”

We are hosting the Syposium on the Zoom platform, which allows logging in through the Zoom app, through a web browser or by phone. To attend the event, please register here on Eventbrite, and the specific details for attending will be sent to you by email on Tuesday May 19th and again on the day of the event.

As always, non-members are welcome to attend and participate in the discussion. Given the format, you are encouraged to circulate this link to others who may be interested so that they may also register their interest and attend on the day.


Ireland’s Credit Guarantee Scheme for COVID-19 SME Lending

The government has announced a loan guarantee scheme for bank lending to Irish SME’s to help them emerge from the economic shutdown associated with the pandemic. The proposed program provides a lending bank with a guarantee giving 80% pari passu (proportional sharing) loan loss protection for eligible loans to Irish SMEs impacted by the pandemic shutdown. There is also a portfolio cap on the guarantee so that each bank can only claim 80% loss coverage on 50% of its covered loan portfolio.  This effectively shrinks the “tail risk” coverage (if the bank’s SME loan portfolio performs disastrously) to 40%. The guarantee is offset by a 50 basis point fee payable to the government. The budgeted €2 billion loan guarantee program equates to 0.58% of 2019 GDP. Policymakers still have a few weeks to best calibrate the program for maximum effectiveness before a prospective Dáil majority coalition passes the enabling legislation. Given the calamitous economic impact of the pandemic shutdown there is no guaranteed best strategy.

It is useful to compare the proposed Irish program with some of the existing programs. Spain has already opened a €100 billion 70-80% pari passu guarantee program; the budgeted magnitude equates to 8.02% of 2019 Spanish GDP. The French €300 billion loan guarantee program equates to 12.4% of French 2019 GDP. It has 90% pari passu loan coverage for lending to firms with 2019 revenues of €1.5 billion or less; 70-80% pari passu for larger firms. Most generous in the EU is the program of Germany, which has announced a loan guarantee program of €500 billion + which corresponds to 14.6% of 2019 GDP. The “plus sign” here denotes that the German government has explicitly committed to increasing the loan guarantee budget to however much above €500 billion is needed. It is not clear whether such an increase is pre-approved by the EU Commission or alternatively whether an increase will require subsequent vetting. The EU amended state aid rules require “the aid is granted on the basis of a scheme with an estimated budget” so it is ambiguous whether the German government can formally make this unlimited commitment within these newly amended rules. The German program pari passu loss coverage ranges from 100% for the smallest firms down to 80% for the largest eligible (the program covers both SMEs and larger firms, but the very largest German corporations are dealt with separately). The German program also offers fast-track approval and dispersal of funds for smaller loan amounts.

The UK is no longer bound by EU strictures regarding state aid rules and monetary financing rules and this flexibility is reflected in its SME lending aid programs. For small loans the UK government offers 100% loss coverage; 80% for larger loans, with no fee for the guarantee. For small firms (less than £41 million 2019 revenues) the government will pay the first six months of loan interest in addition to providing the guarantee, so the implicit “insurance fee” for the guarantee is negative. The small-loan Bounce Back Loan program has had a fast and successful start, whereas the Coronavirus Business Interruption Loan Scheme (larger loan amounts) which requires more vetting and paperwork has had less quick take-up. The UK budgeted amount for its loan guarantee programs is not fixed beforehand. The UK plan originally had a portfolio cap (as in the proposed Irish plan) but they have dropped it.  The very successful joint programs of the US Fed / US Treasury involve 95% outright loan purchases (equivalent to 95% pari passu loss coverage) with no fee payable. One of the two US schemes (the Paycheck Protection Loan Plan, see my earlier blog entry) has a large subsidy component since the loan amount due is partly or entirely forgiven if the loan proceeds are spent on retaining staff that otherwise would have been made redundant. Unlike the US or UK, Ireland has the prospect of a eurozone sovereign debt crisis looming in the background, shrinking the available fiscal space for bold giveaway programs to save jobs. Ireland also must navigate through the state-aid restrictions of the EU Commission.

The economic rationale for these loan guarantees is fundamental and needs to be understood clearly. To encourage a quick macroeconomic recovery, countries need their banking sectors to engage in this lending which, in the absence of a loan guarantee, is not in their financial interest. Sector risks are substantial in this new SME lending since no one knows for sure which currently impacted sectors will remain closed or deeply troubled. For example, there will be likely be considerable SME lending demand from Irish hotels. Should banks be willing to lend to hotels in Ireland, to allow them to reopen? In the absence of a government-funded loan guarantee, the correct answer is no. Commercial banks earn their value by “being boring,” that is lending to low-risk activities, with unsystematic risks which diversify across individual businesses and sectors, resulting in a modest and predictable realised default rate. In exchange the banks earn a relatively small but dependable interest margin over funding costs. The very uncertain prospects for SME lending outcomes in the post-pandemic period, with large systematic sector risks, are too exciting to be a sensible activity for commercial banks in the absence of a government loan guarantee.

The SME loan guarantee programs of EU countries include a 20-100 basis point loan guarantee fee paid to the national government so that each program can be ruled to not violate the EU rules against individual member state aid to industry. It does not make sense if the guarantee fees payable for these programs are market-value based fees which fully compensate for the value of the risk capital. Charging a market-value-based fee for the guarantee defeats the purpose of the program: to give powerful incentives for otherwise-too-risky lending to SMEs in vulnerable sectors.

Patrick Honohan (2020) overviews these loan-guarantee programs internationally and expresses his concern that these loans may impose too much debt on troubled firms and generate prolonged financial distress. Such a concern is particularly pertinent for Ireland, with its extremely slow and cumbersome non-performing loan (NPL) resolution framework. Honohan also worries that many of these government-guaranteed loans may effectively transform into subsidies via non-payment; this is particularly relevant in the case of Ireland given its political-business culture regarding NPLs. Honohan suggests adding an equity-conversion feature to the loan guarantees, but this might be a bit too complicated in the Irish case.

In terms of the Irish proposal, the 80% guarantee coverage is on the low side relative to comparable nations. 90% coverage would be better; imposing a 20% risk exposure on the banks might slow take-up substantially. Getting a fast and high take-up rate requires that the program is administratively easy to access and well-incentivised for both the SMEs and banks in terms of risk-reward acceptability. The €2 billion budgeted amount seems very low. The guarantee fee (which is counterproductive) should be pushed as low as the EU commission will allow. It would be good if the smaller loans at least could have some sweetener attached, linked to payroll or job retention.

Clifford Chance (2020). Coronavirus – Guarantee Scheme in Spain. [online] Available at: [Accessed 7 May 2020]

Department of Business, Enterprise and Innovation (2020). Credit Guarantee Scheme for COVID-19 FAQs. [online] Available at: [Accessed 7 May 2020]

European Central Bank (2020). ECB announces new pandemic emergency longer-term refinancing operations. [online] Available at: [Accessed 7 May 2020]

European Commission (2020). Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak. [online] Available at: [Accessed 7 May 2020]

European Commission (2020). State aid: Commission approves German measures to support economy in Coronavirus outbreak. [online] Available at: [Accessed 7 May 2020]

Financial Times (2020). State-backed SME lending picks up pace too late for many. [online] Available at: [Accessed 7 May 2020]

Financial Times (2020). UK set to launch loans scheme for small businesses. [online] Available at: [Accessed 7 May 2020]

Financial Times (2020). How will the UK’s ‘bounce back’ loans work? [online] Available at: [Accessed 7 May 2020]

Financial Times (2020). Loan guarantees: what funding will be available to UK businesses? [online] Available at: [Accessed 7 May 2020]

Financial Times (2020). More than 100,000 apply for ‘bounce back’ loans. [online] Available at: [Accessed 7 May 2020]

Patrick Honohan (2020). Pandemic loans to firms: Postponing the evil day? [online] Peterson Institute for International Economics. Available at: [Accessed 7 May 2020]

Ireland Strategic Investment Fund (2020). Pandemic stabilization and recovery fund. [online] Available at: [Accessed 9 May 2020]

Bruno Robino (2020). Capped Portfolio Guarantee. European Investment Bank. [online] Available at: [Accessed 11 May 2020] 

Shearman and Sterling (2020). Updated – Covid-19 France: State Guarantee Scheme for New Money Loans. [online] Available at: [Accessed 7 May 2020]

The Telegraph (2020). Germany’s 100pc guarantees highlights shortcomings of UK loan scheme. [online] Available at: [Accessed 7 May 2020]