Hans-Werner Sinn provides a provocative assessment of the current crisis in Europe here. His take on the recent robustness of the German economy is novel. The slides are particularly entertaining though not always flattering to Ireland.
In the last 2 years or more, serious academic economists such as Morgan Kelly, Karl Whelan and other contributors to this blog have been subject to a campaign of anti-intellectual abuse by the ‘leaders’ of public opinion in Ireland. The ad hominem attacks on Brian Lucey were unforgiveable. Some of these opinion formers (those who work in the financial services sector) may shortly be unemployed. Those who remain should be shunned, certainly by academics.
However one name sticks out – former Taoiseach Garret Fitzgerald. Let me make my personal position clear: I can think of almost no one in Irish public life whom I have admired more. Let us not also forget that he served as a faculty member of the economics department in UCD for part of his career. Consequently, his “gratuitously condescending comments….. regarding the NAMA dissenters”, to quote Kevin O’Rourke earlier today, were particularly puzzling.
Garret, I know you have the dignity to restore your reputation. Now do so.
I’ve just recovered my composure after reading the following article in today’s Irish Times. Its entitled “The top 100 best-paid in education” and is available here.
It should not have surprised me that all 100 are essentially full-time administrators. The salaries of research professors all seem to be subordinate. This contrasts sharply with UK universities (let alone US institutions) where serious salaries are paid to top research talent. Tell me I’m wrong: otherwise I’ll start sending food parcels to my separated brethren in the Republic.
The BBC has been leading its bulletins this morning on the latest statement by Minister Lenihan. He gave an extensive interview on the influential Today programme on Radio 4. Listeners can make their own assessment of its tone by listening to it at http://news.bbc.co.uk/today/hi/today/newsid_9047000/9047087.stm
You might be alarmed to learn that the BBC headlines the interview on its website as “Lenihan: Ireland ‘can’t print money'”. Is the Minister restarting his midnight visits to Dave McWilliams gaff?
I’m constantly surprised by the naivety of opponents of Ricardian Equivalence. There are indeed many reasons why it may not hold. Some of these have already been mentioned in a previous post. I can add another to the list: hyperbolic discounting.
In addition, the difficulties associated with econometrically testing the proposition are almost intractable, mainly because of endogeneity considerations. What is certain is the near impossibility of isolating a particular policy episode and conclusively asserting that it does or does not amount to an expansionary fiscal contraction.
Nevertheless, none of the arguments against Ricardian Equivalence are sufficient to enable us to conclude that there is no tax discounting whatsoever. Such a view cannot provide “a valuable theoretical baseline”. The same remark applies to policy. Otherwise, the sort of spiralling sovereign debt burden, which Ireland is currently experiencing because of the bank bailout, would have no welfare implications because it would not affect private behaviour.