Angela Merkel has just given us a compelling reason to be grateful for central bank independence.
Update: Wolfgang Münchau is pessimistic about future ECB independence here.
Author: Kevin O’Rourke
The news today that the proportion of Leaving Cert students taking honours maths and physics has declined confirms what third level teachers already know: mathematical literacy is poor in Ireland. There are obvious implications for the credibility of the government’s knowledge economy ‘strategy’, but since the government has little credibility anyway that is not of any great importance. The problem of low mathematical standards is, however, an important one for the economy. It is a problem for which there are no quick fixes, but which could be solved given time, willingness to change, and attention to detail. Which makes it a nice metaphor for the Irish economy more generally.
According to Brian Cowen, “most economists now say that the Government’s strategy for the public finances is the right one”.
What a cheek.
Yes, most economists — indeed practically all economists — agree that the Government has to do everything possible to avoid State bankruptcy, and that the Government is now taking required action on the public finances.
However, the fact that the Government is cutting expenditure and raising taxes as severely as it now has to, thus lowering aggregate demand and worsening unemployment at the worst possible time imaginable (we can argue about the size of this effect, but its sign is in no doubt) is a damning indictment of Fianna Fáil/PD fiscal policy over the past few years.
Following the publicity given last week to the Concluding Statement of the IMF’s recent Article IV Consultation Mission to the UK, I decided to check it out for myself. There is a full list of recent Concluding Statements here. As you can see, Ireland is conspicuous by its absence from a very comprehensive list of countries. This is not because Article IV consultations are not done here, since they are.
So, what explains our absence from the list? Have Concluding Statements never been published for Ireland, and if so, why is that? Or, were they published at one time, and was publication subsequently halted — and if so, why?
Courtesy of Mark Thoma, here is a nice graph with house price-rent ratios for five countries, including Ireland.