Author: Philip Lane

SSISI Talk: The Dynamics of Ireland’s Net External Position

I will talk on this topic on Thursday at 6pm at the Royal Irish Academy.

Update:  I will post the paper and slides early next week.

Abstract

Ireland’s net external liability position expanded in dramatic fashion during 2008- 2010, despite relatively small net financial flow during this period. Understanding the the source and persistence of this negative shock is critically important in as- sessing the future path for the Irish economy but data analysis is made difficult by the confounding impact of Ireland’s major role as an international financial centre, such that the “core” international balance sheet remains obscure. However, there is considerable indirect evidence to believe that a substantial component of this decline is genuine and relates to the internationally-leveraged structure of the financial port- folios of domestic Irish residents.

Academic Perspectives on Sovereign Default, Austerity and VAT Hikes as a Substitute for Currency Devaluation

Harvard’s Gita Gopinath is interviewed on these topics in the Review of Economic Dynamics Newsletter here.

ERU Seminar: The Collective Bargaining Wage Premium in Ireland and 14 other EU countries

ERU Seminar: The Collective Bargaining Wage Premium in Ireland and 14 other EU countries

Date: Wednesday November 23rd 2011
Topic: The Collective Bargaining Wage Premium in Ireland and 14 other EU countries
Speaker: Dr Rory O’Farrell, ERU
Venue: INTO Training Centre, 38 Parnell Square, Dublin 1
Time: 4-5:15pm (Tea and coffee from 3:50pm)
Abstract:

This paper measures the collective bargaining pay premium for Ireland and 14 other European countries using data from the 2006 European Structure of Earnings Survey (SES). The European SES is a survey of matched worker-firm data that is gathered in a comparable fashion across the EU and gives an opportunity to measure the collective bargaining pay premium in a consistent cross-country manner.
The paper shows that a significant firm level collective bargaining pay premium is found across Europe, but its size varies widely with regard to country and form of collective bargaining. There is also evidence that firm level bargaining leads to a more compressed wage structure.

JEL: J31, J51, J52
Keywords: Trade unions, Collective Bargaining

VAT to rise by 2%?

It is widely reported that the German parliament is debating the news that Ireland is planning to raise the top VAT rate by 2%.   Of course, all else equal, an increase in any tax rate has a negative impact.  However, it is important to appreciate that an increase in VAT that avoids an increase in labour taxes is, in relative terms, an employment-friendly policy and is also part of the mix that can engineer a “fiscal devaluation” that can partially replicate the impact of a “currency devaluation” .

A VAT increase is especially effective if it is understood to be permanent (no point in delaying consumption until the tax increase is reversed).  Even better, a widening of the VAT base can further assist in raising revenue, alleviating pressure on other parts of the tax base.

In terms of income distribution, the regressive impact of a VAT increase has to be calculated in the context of the overall package of taxes and transfers, since it is important to work out the net impact of all policy changes taken together, rather than on a “one at a time” basis.

European Banks and ECB Funding

The WSJ has an article on the scramble for assets that are acceptable as collateral at the ECB.  (The Irish banks have circumvented much of this by relying on an array of government-guaranteed securities.)