IEA 2015 Conference

The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. The ESR guest lecture will be given by Professor Christopher Udry (Yale University) and the Edgeworth Lecture by Professor Giancarlo Corsetti (University of Cambridge). This year we have a very strong and expanded programme.

Registration for the conference is through the exordo site. Early registration costs 100 euros and includes dinner on the 7th. There is a much lower price for student delegates at 35 euros.

Bookings for accommodation should be made directly. We have negotiated some discounted hotel rooms at the Maldron Hotel, Cardiff Lane, which is close to the conference venue (mention the “IEA2015″).

I’m looking forward to seeing you there.

IEA 2015 – Submission Deadline Approaching Fast!

The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. Edgar Morgenroth (Economic and Social Research Institute) is the local organizer.

The ESR guest lecture will be given by Professor Christopher Udry (Yale University) and the Edgeworth Lecture by Professor Giancarlo Corsetti (University of Cambridge).

The Association invites submissions of papers to be considered for the conference programme. Papers may be on any area in Economics, Finance and Econometrics.
The deadline for submitted articles is the 8th of February 2015 and submissions can be made through this site.

Please note that the Irish Economic Association awards two prizes for conference papers, the Denis Conniffe prize and the Novartis prize.

The Denis Conniffe prize of €500 is awarded for the best paper by a young author-presenter at the Irish Economic Association annual conference. To be eligible the author must be either (a) aged < 30 or (b) within 3 years of finishing a PhD. For co-authored papers, all co-authors must meet these criteria. If you are eligible for this award and would like to be considered for the prize, please let the conference organiser know, when submitting your paper. The prize award will be decided by the IEA council and will be announced at the annual conference.

The Novartis prize of €500, is sponsored by Novartis Ireland, is awarded to the best Health Economics paper presented at the Irish Economic Association annual conference. If you consider your paper to be in the “health economics” field and would like to be considered for the prize, please let the conference organiser know, when submitting your paper. Members of the IEA council or individuals affiliated to Novartis are not eligible for the prize. The prize award will be decided by the IEA council and will be announced at the annual conference.

2015 Annual Irish Economic Association Conference

The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. Edgar Morgenroth (Economic and Social Research Institute) is the local organizer.
The ESR guest lecture will be given by Professor Christopher Udry (Yale University) and the Edgeworth Lecture by Professor Giancarlo Corsetti (University of Cambridge).
The Association invites submissions of papers to be considered for the conference programme. Papers may be on any area in Economics, Finance and Econometrics.
The deadline for submitted articles is the 8th of February 2015 and submissions can be made through this site.

Conference: Financing SMEs in Economic Recovery

Conference: Financing SMEs in Economic Recovery
ESRI, 26/09/2014, 8.30am -1pm

The ESRI will hold a half-day conference focusing on the bank and non-bank financing environment of SMEs in economic recovery. The research presented aims to contribute to a policy environment that facilitates a smooth recovery in the SME sector. Programme outline below:


08.30 Registration and Coffee
09.00 Welcome: Professor Frances Ruane, Director, ESRI
09.05 Opening Address: Simon Harris, T.D., Minister of State at the Department of Finance

Evidence on SME Financing: Ireland in a European Perspective
Chair: Fergal McCann, Central Bank of Ireland

09.30 Which Firms Apply for Credit in the Euro Area?
Annalisa Ferrando, European Central Bank

10.00 SME Financing Landscape in Ireland: A Comparative Perspective
Conor O’Toole, Economic and Social Research Institute

10.30 Tea/Coffee

Policy Objectives and Supports for Funding SMEs
Chair: Niall O’Donnellan, Enterprise Ireland

11.00 SME Default in Ireland
Tara McIndoe-Calder, Central Bank Ireland

11.30 Policy Options for SME Financing in Ireland
Martina Lawless, Economic and Social Research Institute


12.00 Roundtable discussion
Chair: John Hogan, Department of Finance

Participants: Loretta O’Sullivan (BoI), Patricia Callan (Small Firms Association), John O’Sullivan (ACT Venture Capital ), Nick Ashmore (SBCI), Garrett Murray (Enterprise Ireland )

Please register at:

ESRI QEC Research Notes

Last week the latest ESRI Quarterly Economic Commentary was published. It includes 5 research notes including one by myself on the regional dimension of the unemployment crisis.

While there is a lot of discussion about unemployment, the differences across regions have not received much attention. The note shows that the differences are significant. It also shows that things would look a lot worse if it had not been for a drop in labour force participation – in the Border region the unemployment rate could have reached 27%. Not surprisingly a sharp drop in employment is the major cause of the increase in unemployment, but a look at the sectoral breakdown of employment changes gives some interesting results. Firstly, construction employment appears to have contracted quite uniformly across the country. Secondly, employment in education and health actually grew. Thirdly, there are some interesting differences across the regions with respect to other sectors. For example, manufacturing declined much more in Dublin than elsewhere. Most importantly the analysis suggests that the underlying factors that are responsible for the differences in unemployment rates across the regions are very persistent but were hidden during the boom. You can expect some more analysis on this in the near future.

The other notes are:
Tax and Taxable Capacity: Ireland in Comparative Perspective
Comparing Public and Private Sector Pay in Ireland: Size Matters
Trends in Consumption since the Crisis
Revisions to Population, Migration and the Labour Force, 2007-2011

ESRI Environmental Economics Seminar

Venue: The ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2

Date: 03/05/2012
Time: 9.00 -13.00

This seminar will present some of the latest research undertaken by ESRI researchers as part of an Environmental Protection Agency (EPA) funded project. A range of topics will be covered, including surface water quality, transport and energy.


9.15     Introduction

9.30     Towards Green Net National Product: A Summary of modelling and other output – Edgar Morgenroth

10.0 The Impact of Land Use on Lake Water Quality in Ireland 2004-2009 – John Curtis and Edgar Morgenroth

10.30 The value of domestic building energy efficiency – evidence from Ireland – Marie Hyland, Ronan Lyons (U. Oxford), Anna Alberini (U. Maryland) and Sean Lyons

11.00 Coffee Break

11.30 An Analysis of Non-Commuting Travel – Aine Driscoll, Edgar Morgenroth and Anne Nolan

12.0 Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand – Valeria di Cosmo, Sean Lyons and Anne Nolan


To register to attend this Seminar, please register here.

View map and how to find us.

If you would like to receive our monthly eNewsletter with news of ESRI activities and publications, please subscribe here.

ESRI Renewal Conference: Economic Adjustment

Venue: The ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2

Date: 18/04/2012
Time: 8.30 – 13.00

The fourth ESRI Renewal Conference will examine the best available domestic and international evidence relating to the need for rapid economic adjustment. Papers will address:

  • What explains the apparent inflexibility of wages in the Irish labour market?
  • How can competition and regulatory policies help in economic recovery?
  • What does evidence tell us about designing a property tax?

Papers will be followed by a response from an expert in the field and an open Q&A session.


8.30 Registration & Refreshments

9.00 Opening remarks: Frances Ruane, Director, ESRI

9.05 Explaining Changes in Earnings and Labour Costs During the Recession
Adele Bergin, Elish Kelly, Seamus McGuinness (ESRI)
9.35 Response: Kieran Mulvey, The Labour Relations Commission
9.45 Audience discussion

10.10 Troubled Times: What role for Competition and Regulatory Policy?
Paul Gorecki (ESRI).
10.40 Response: Cathal Guiomard, Commission for Aviation Regulation
10.50 Audience Discussion

11.15 Coffee

11.45 Property Tax in Ireland: Key Choices
Claire Keane, John Walsh, Tim Callan, Michael Savage (ESRI)
12.15 Response: Dr William McCluskey, University of Ulster
12.25 Audience Discussion

12.50 Close


To book a place at this conference, please register here

For further information please email

The Economic Renewal Conference Series is supported by FBD Trust

View map and how to find us.

If you would like to receive our monthly eNewsletter with news of ESRI activities and publications, please subscribe here.


Download Programme

Public Capital Programme

Here is a link to the new infrastructure and capital investment programme. There is a lot in there so it will take a little time to digest it.

Some quick points:

– There is a commitment to the National Children’s Hospital;

– There is funding for new schools;

– Luas BXD to go ahead (Metro North and DART Interconnector shelved, Metro West was shelved some time ago);

– the A5 project in Northern Ireland (80 km from the border to Derry) has now also been shelved (in addition to the shelving of 45 other national roads projects announced some time ago);

Seminar on R&D and Climate Change Innovation

On the 21st of September Professor David Mowery of UC Berkeley will give a seminar entitled ‘Mission Driven R&D and Climate Change Innovation: Lessons from US Experience with Information Technology’ at the ESRI (Whitaker Square, Sir John Rogerson’s Quay, Dublin 2).  This is a lunchtime seminar starting at 1pm. More details can be found here.

Smart Economy Jobs in Irish Regions

Guest Post by Dr Chris van Egeraat of the Geography Department at NUI Maynooth and Chariman of the Regional Studies Association Irish Branch.

Enterprise Ireland announced that 445 jobs will be created in 24 new high potential start-up companies which have been supported by government through Enterprise Ireland in the second quarter of 2011. The announcement follows on the 310 new jobs announced earlier this year as part of the first quarter results of Enterprise Ireland’s High Potential Start Ups programme.

Many of the companies involved operate in the sectors that the Government has identified as part of the Smart Economy strategy, including biotechnology, life sciences, ICT and financial services. This is good news for Ireland but from a regional development perspective it is important to consider the extent to which different regions benefit from these developments.

Interestingly the press release includes a breakdown of number of projects and related jobs by location. Unfortunately, the information pertains to 16 of the 24 investments only, and the press office was not in a position to provide details of the other eight investments because of the commercially sensitive nature. The data allows us to between the Greater Dublin Area (including Kildare and Wicklow), the rest of the South and East (S&E) Region and the Border-Midlands-West (BMW) Region.

The results are striking. Three quarters of the new projects are located in the Greater Dublin Area and a further 12 per cent in the rest of the S&E region. Only 12% of the projects are located in the traditionally lagging BMW region. The results in terms of jobs are similar with merely 12% of the jobs located in the BMW region.

The data for the first quarter of 2011, suggests that this is not a once-off result. In the first quarter the GDA accounted for nearly 70 per cent of the new projects, while the rest of the S&E region accounted for a further 16%. With 15% of the new projects, the BMW region again performed poorly. The press release for the first quarter did not provide complete data for jobs.

To put these figures into perspective one can compare these with the geography of employment in all Irish-owned agency-assisted companies by regions in 2010 using figures from the Forfas annual employment survey. Currently the Dublin region only accounts for 31 per cent of jobs in indigenous assisted companies with the rest of the SE accounting for 41 per cent. The BMW region still accounted for 28% of the jobs in 2010.

Clearly, there are some limitations to the new data on the geography of recent project and job announcements, not at least the fact that we don’t have access to the complete dataset. However, if the results do represent a real trend, this will have important implications for the economic development potential of Irish regions and raises questions about the role that different regions can play in the Smart Economy as promoted by the Irish Government.

The regional trends outlined above highlight the timeliness and relevance of the upcoming Irish Regions in the Smart Economy Conference, organised by the Regional Studies Association at NUI Maynooth. For further details:


Steinbrück: Admit Greece will need restructuring

Given the recent discussions of  the views of Professor H-W Sinn on this site it seems only right to point out that there are also other opinions in Germany. A number of current and former German politicians (Helmut Schmidt, Joschka Fischer) have been critical of the leadership provided by key politicians. Now the former finance minister Peer Steinbrück (still an active opposition politician) has found some clear words: “Greek default is inevitable – lets call a debtors conference.”

Review Group on State Assets and Liabilities

The report of the Review Group on State Assets and Liabilities has been published here. While some of the key recommendations had been signalled over recent days in the media there is a lot of detail in the report. Apart from the recommendations on asset disposal there are lots of recommendations on the regulation and governance of state bodies. 

NI Corporation Tax

The UK Budget was published yesterday. One of the noteworthy changes announced as part of this is a reduction in corporation tax:

“a reduction in the main rate of corporation tax by a further one per cent. From April 2011, the rate will be reduced to 26 per cent with further yearly reductions of one per cent until 2014 when it will reach 23 per cent”.

In addition the UK Treasury has published a consultation document entitled Rebalancing the Northern Ireland Economy, which specifically considers the potential for, and costs and benefits of devolving the power to vary the corporate tax rate in Northern Ireland, potentially reducing the rate in Northern Ireland to the 12.5% that applies in the republic of Ireland.

In the context of the pressure from France and Germany for the Republic of Ireland to raise its corporation tax rate, both the reduction in corporation tax rates in the UK and the potential harmonisation of the corporation tax rate to 12.5% on the island of Ireland are an interesting development.

John Bruton on the EU response to the Irish Banking Crisis

John Bruton has an interesting opinion piece in the Irish Times – the headline is “Europe also responsible for Ireland’s Banking Crisis”. He is of course absolutely right to point out, as others have done, that this crisis would not have happened if German, UK, Belgian and other banks had not lent to Irish banks, just as much as it would not have happened if Irish banks had not lent to Irish developers. What he does not point out is that other EU members benefitted greatly from the Irish boom e.g. where were the BMWs, Mercs, Audis etc. built?

John Bruton is very critical of the EU response and highlights that it is very narrow and one sided. For example he points out that the agreement reached at the last summit only provides a mechanism for help if the crisis threatens the entire Euro-zone – no scope to help out countries hit by an asymmetric shock. He also points to other crises facing the EU that need serious action.

To me the approach taken at the summit (and during other recent decisions) implies a departure from the principle of solidarity between the EU members that was supposed to underpin the EU. Of course all EU members can start looking after domestic interests only – Angela Merkel might end up with a nasty surprise the next time she is looking for a decision that requires unanimity. In that sense, far from solving problems, the last summit has added more uncertainties for the EU. No doubt the markets will use the Christmas break to sharpen their knives!

Wasting Money on Roads

An interesting little scrap has broken out between An Taisce and the NRA. As reported in the Irish Times yesterday, An Taisce has accused the NRA of using false data, while the Irish Independent reports that the NRA dismisses the criticism.

The criticism by An Taisce refers to traffic projections which are now seven years old, and the fact that traffic volumes have been falling. The NRA counters that roads are build with a longer time horizon in mind. While I agree with the NRA that roads are build with a longer time horizon in mind, it is nevertheless true that the projections are seriously out of date and that the starting position has changed significantly. Furthermore, there are at least some schemes, which are grossly over designed. An Taisce points to  a refusal for planning permission for a dual carriageway between Bohola and Ballina, because the NRA apparently failed to support the project on traffic grounds.

Unfortunately gold-plating of projects is not unusual. In the ESRI Mid-Term Evaluation of NDP 2000-2006 we pointed out that “roads with capacity of 55,500 AADT, or anywhere near it, appear to be a significant overdesign for the numerous lightly-trafficked sections of the N8 and N9”. Such schemes cannot pass a reasonable cost-benefit analysis when compared to more appropriately sized schemes. Unfortunately, the lesson does not seem to have been learned and the tax payer is expected to pay for overdesign again (the fact that some of the schemes are PPPs is irrelevant here as these also have to be paid for by tax payers).

Take the example of the N2, for which there are two proposed schemes in the system. I have already referred to the idiotic scheme to by-pass Slane where the key issue could be simply dealt with via a HGV ban.

The second scheme is in North Monaghan, where a by-pass of Monaghan and Emyvale to dual carriageway standard is being pursued. Interestingly Monaghan has already been by-passed and anyone who knows the road also knows that there is no danger of congestion except through Emyvale (for which a by-pass is likely to be supported by some analysis). Traffic counts bear this out – average total volumes (north and southbound) for 2010 amount to 5,413 AADT. Why then are we building for 35,000 AADT – almost seven times the current volume? Further south, the section between Castleblaney and Clontibret has been upgraded to 2+1, and further south still between the M1 and Castleblaney a wide 2 lane road is perfectly sufficient to achieve the target level of service (80km/h) – both of these sections of road carry a higher level of traffic than that, which is supposed to be upgraded to dual-carriageway standard. 

The construction costs of a dual carriageway are 82% higher (according to the NRA Road Needs Study) than for a wide 2 lane road – can we really afford such goldplated schemes?

Establishment of the Review Group on State Assets

As has been widely reported the Minister for Finance has established a Review Group on State Assets that is chaired by Colm McCarthy.

The terms of reference are:

  • To consider the potential for asset disposals in the public sector, including commercial state bodies, in view of the indebtedness of the State.
  • To draw up a list of possible asset disposals.
  • To assess how the use and disposition of such assets can best help restore growth and contribute to national investment priorities.
  • To review where appropriate, relevant investment and financing plans, commercial practices and regulatory requirements affecting the use of such assets in the national interest.
  • While most comments in the media have interpreted the focus on asset disposals to refer only to privatisation, it is perfectly possible that the various state companies hold assets that might not be essential for the efficient running of these businesses and thus could be disposed of without privatisation.

    In relation to privatisation it will be important not only to consider the short-run gain in funds through the sale of assets, but the longer-run impact on the competitiveness of the economy. Long-run considerations should include the loss of control of national strategic assets that would result from a sale. This might be addressed by keeping the key infrastructures such as networks in public ownership.

    In some cases it might also be useful to consider a long-term lease as an alternative to an outright sale of assets, which will also yield revenue up-front but avoids the ‘selling off of family silver’. Joint ownership is another option.

    Looking through the list of assets to be reviewed it is hard to ignore the differences in ownership patterns with many other countries. Electricity generation, ports and airports are private in many countries.

    CSO Quarterly National Accounts Q1 2010

    The CSO released the latest Quarterly National Accounts covering the first quarter of 2010. While seasonally adjusted GDP is up by 2.7% on the previous quarter, GNP is down by 0.5% (net factor outflows were up 11%on the previous quarter) . Compared to the same quarter in 2009 GDP was down by 0.7% and GNP was 4.2% lower. Exports are up compared both to the previous quarter and the same quarter a year ago. Building and construction has continued to contract significantly (-16.3%) while other industry has done very well (+11.6% for Industry including Building and Construction).

    Relative Food Prices Across Europe

    Yesterday Eurostat released their annual comparison of food prices. It shows that the prices in Ireland are the second highest in the EU after Denmark. What is more worrying is that instead of coming down faster in Ireland than in other countries food prices were actually relatively higher in 2009 than in 2008 or 2007. Irish consumers pay 29.2% more than the EU average. While Italy and Finland improved their relative price levels all other Euro members disimproved. The biggest relative improvement was recorded by Iceland, followed by Sweden and Poland.

    InterTrade Economic Forum

    On the 28th of April InterTrade Ireland held their second Economic Forum entitled Shaping Recovery. Speakers included Barry Eichengreen (Berkley), Linda Yueh (Oxford), Will Hutton (Work Foundation) and Michael O’Sullivan (Credit Suisse). The presentations have now been put on the web and can be found here. As the speakers took a wider perspective the presentations are still relevant.

    Barry Eichengreen argued that Zarnowitz’s Law – the deeper the recession the stronger the recovery – would not hold this time. While he argued that the US won’t experience a double dip, he also thinks that current projections are to optimistic. He believes that Europe will underperform relative to the US. He also had a few words on Greece.

    Linda Yueh focused on Asia. She was upbeat but also highlighted the issue of global rebalancing. She pointed out that as China has a very poorly developed financial system the exposure to the financial crisis had been minimal. However, internal rebalancing and re-orientation of the economy towards domestic consumption were important challenges. She highlighted that China is becoming a capital exporter particularly in relation to energy, minerals and other raw materials (this has implications for Europe).

    Will Hutton focused on innovation. He also commented on the economic problems in the UK and Ireland (he made a few comments that might provoke some debate – unfortunately he had to leave the discussion early). In general he argued that since innovation depends on the cumulative stock of scientific and technological knowledge most innovation will continue to take place in the EU, US and Japan but that it was important to put the appropriate structures in place.

    Michael O’Sullivan took a closer look at Ireland, outlining achievements, comparing the latest crash with previous ones and argued for institutional reform He also had a very interesting quote about the Irish by Fridrich Engels that I had not heard before. His graph on the growth of Irish golf clubs also caught attention!

    All in all  there was plenty of food for thought including lots of interesting graphs and I suggest you have a look yourself. You can also listen to the presentations.

    EU Spring Forecasts

    The EU Commission released its Spring Forecast today. The abstract states that:

    The economic recovery is underway in the EU, although it is set to be a gradual one. The economic recession came to an end in the EU in the third quarter of last year, in large part thanks to the exceptional crisis measures put in place under the European Economic Recovery Plan, but also owing to some other temporary factors.

    The speed of recovery is forecast to increasingly vary across EU countries, reflecting the extent of the housing-market correction needed, the size of the financial-services sector and the degree of internal and external imbalances.

    Once you get beyond the positive start they do admit that there is significant uncertainty. Also it is hard to get excited about an EU unemployment rate of 10% and debt of 80% of GDP.

    For Ireland they paint a positive picture for 2011 with 3% GDP growth and a slight reduction in the unemployment rate.

    Wasting money on roads?

    A number of stories on roads funding have been in the media over the last few weeks.

    Firstly, Frank McDonald in a piece in the Irish Times had a go at the motorway building programme of the NRA. In particular he criticises the plans for the Slane bypass (N2 Dublin to Derry). That story was also picked up in Today FM’s Last Word (Matt Cooper) last Thursday.

    The rationale for the bypass project involving a new bridge over the river Boyne is straightforward. Currently a significant volume of traffic of which about a quarter is HGVs (some 1600 per day) negotiate the steep valley on both sides of the river which is crossed via a narrow bridge. The nature of the roads has been blamed for a number of serious accidents involving HGVs, and hence the bypass is to be built to reduce accidents.

    But why are there so many HGVs on a road connecting Ashbourne (population 6500) with Ardee (population 4000)? The answer is simple once on considers that the N2 runs almost parallel to the tolled M1, which is both quicker and safer. In other words the HGVs are on the N2 to avoid the toll, and now the tax payer is going to help them avoid the toll by building a new expensive bridge and dual carriageway. The simple, cheap and obvious solution to the problem of HGVs going through Slane is to ban them from doing so, as I argued in May 2009. This would also avoid all the hassle of forcing a major construction project through an area rich in archaeological sites and historic significance. I wonder is this a case for the Comptroller and Auditor General?

    Secondly, on the 22nd of February Minister for Transport Noel Dempsey announced €411.408 million for 2010 Regional & Local Roads Programme. Of course the Minister did not announce any extra resources, rather he is reprofiling expenditure that was to go to road improvement. Given the damage to many roads due to the flooding in the autumn and the frost over the winter most people will welcome these resources.

    But is this money going to be well spent? When it comes to potholes it is curious how they always appear in the same places, and often they are back soon after they were filled. Likewise, the same stretches of road (surprisingly many for a country where rain is not uncommon) are also subject to flooding on a regular basis, with consequent road damage. It is also peculiar that our road surfaces melt at the first sign of the sun (even over recent poor summers), again leading to significant damage.

    In that context engineering and material standards should be reviewed in order to minimise future damage and costs before spending €400 million on repairing roads.

    I am not against spending money on roads – anyone who has read my work on public investment will know that – but we should make sure we use the scarce resources we put into roads to best use.

    Hangar 6

    This topic has found its way onto another thread, and given that it has occupied lots of newspaper space and airtime over the last few days it is probably useful to discuss it here in terms of the economic issues. This has been a bit like a tennis match with the ball going back and forth for some time so it is hard to keep track of all the points.

    On the one side we have Michael O’Leary who claims he wants to (re)create 300 jobs, but needs Hangar 6. On the other side we have Mary Coughlan and the DAA who say Hangar 6 is not available, as Aer Lingus has a lease on it.

    While Michael O’Leary appears happy for other airports to build a facility for him, he does not seem to want the DAA or, given that he appears to prefers not to deal with them, the IDA to build a new hangar for him at Dublin airport. It would appear that the reason for this is cost – he claimed on radio that hangar 6 would be available at a low cost. No doubt Aer Lingus is also getting it at a low cost. In the debate some have argued that Ryanair is pursuing a different agenda – to open Hangar 6 as a terminal. Ryanair say they would be happy to sign a legal agreement preventing them from doing so. So what is this all about??

    In a letter to the Irish Times the chairman of Aer Lingus, Colm Barrignton, makes the point that hangar 6 is the only hangar at Dublin airport capable of accommodating wide bodied planes, and that it is extensively used. Could the ability to accommodate wide bodied planes be the key to this scrap? At the moment Ryanair do not have any such aircraft, but might Ryanair have plans to get into the medium- and long-haul business? Aquiring hangar 6 would allow them to build a base in Dublin while at the same time discommoding Aer Lingus, which would be a competitor in that market?

    IMF on NAMA and lending

    As promised below, there is a story in today’s Irish Times that: “THE INTERNATIONAL Monetary Fund (IMF) told Minister for Finance Brian Lenihan last April that the National Asset Management Agency (Nama) would not lead to a significant increase in lending by the banks.” I dare say that this (NAMA not resulting in increased lending) does not come as a huge surprise to anyone??

    Financing Infrastructure

    Today’s Irish Times reports that the IMF had warned that NAMA would not significantly increase lending (separate thread). Increased lending is something businesses are looking for, but with public budgets being squeezed one area of investment that will also need to attract significant non-public funds is infrastructure.

    A story by Louise McBride in the Sunday Independent argues that “Greece and Spain’s financial woes are making it tougher than ever for Governments to raise cash for vital state projects”. She argues that the €70 bn held by Irish pension funds is being targeted by Brian Lenihan.

    While the key issue here is the level of government debt rather than the ability to raise cash, the article makes an important point that is being discussed in many countries – how do we fund our infrastructure in the current fiscally constrained environment?

    Given that infrastructure is typically a fairly safe investment that can yield a certain inflation indexed return, pension funds should find it useful to invest in infrastructure. A range of possible projects is presented in an accompanying article, including Metro-North, Western Rail Corridor, Landsdowne Road and National Parks.

    What the article does not properly consider is that of the €70bn only a fraction should be invested in infrastructure given the need to hold a balanced portfolio. The other point is that it is not obvious why Irish pension funds should necessarily invest in Irish infrastructure or indeed why we should not expect foreign pension funds to invest here.

    The key issue in attracting private funding into projects is a revenue stream. Without a relatively certain income private funding will not materialise. That would seem to rule out national parks unless anyone is proposing to charge an entrance fee and the construction of very long fences. A certain and sufficiently large income or rather the likely absence of one would rule out private finance for the Western Rail Corridor. In other words the projects need to stack up as a business proposition, and those that are driven more by political or redistributive goals will have to be ditched (in the absence of other funding). Thus, private funding should have a significant positive impact in that there will be less ‘gold-plating’ and only likely winners will be get funded.

    The issue of private finance for public infrastructure and services should also ignite a debate about what services should be provided publicly in the first place. Should public transport and water be provided publicly or could they be privatised? As was highlighted recently our water supply infrastructure (primarily the pipes) is in serious need of investment, which may not be forthcoming from public funds, yet to get private sector involvement the sector will need to consolidate significantly.  

    George Lee resigns from Fine Gael and his Dail seat

    I just spotted this – had to check I got the date right as this seems to much like a first of April story, but sure enough his former (???) colleagues at RTE, and the Irish Times have reports on this.  At the time George got elected a number of comments on this blog made the point that this would increase the economics know-how in the Dail.