Banking Crises: Lessons from Finland and Sweden

The European Commission have just released a new working paper by Lars Jonung, Jaakko Kiander and Pentti Vartia that examines the boom-bust-recovery cycle in Finland and Sweden.

The paper is available here: The great financial crisis in Finland and Sweden – The dynamics of boom, bust and recovery, 1985-2000

Hard data on the slump in the construction sector

The CSO last week released its index of employment in the construction sector.  This index has 2000 as its base year, with 100 the average value of the index in 2000.  The index peaked in September 2006 at 113.8 and the October 2008 value is 83.6: this represents an 18.1 percent decline since October 2007 and a 26.5 percent decline from its peak.

Adjusting to the End of a Housing Bubble: Lessons from Spain

Ireland is not the only country undergoing a sharp contraction in housing and it is interesting to learn about the policy debate in other countries (especially fellow members of the euro area). This new article on VoxEU gives a good overview of the current debate in Spain:

The Spanish trade-off: Bricks vs. brains

On Deficits and Debt

Colm McCarthy provides an interesting analysis in the Irish Times today (December 3rd 2008) about the poor November tax returns.  A key issue raised by Colm is the market’s appetite for sovereign bonds, in view of the projected rapid increase in issuance across the advanced economies. Since there is a general increase in risk aversion, it will be important to ensure that Ireland is perceived as a low-risk sovereign. To this end, it is important for the government to establish a new multi-year fiscal programme that shows how the growth in public debt will be managed, with a clear plan to return the debt to a sustainable path once economic recovery takes hold.

Fiscal Policy for a Slowing Economy

The general budget balance for Ireland has sharply declined, with a surplus in 2007 being transformed into a deficit of at least 5.5 percent of GDP in 2008 and a target deficit of 6.5 percent of GDP in 2009.

The appropriate fiscal balance for Ireland was the subject of a panel discussion at the ESRI Budget Perspectives 2009 Seminar in October 2008.  Papers and/or presentations by Ray Barrell, Joe Durkan, Patrick Honohan and Philip Lane are available here.

There is also a relevant paper by Philip Lane from the ESRI Budget Perspectives 2008 Seminar, held in October 2007:  ”Fiscal Policy for a Slowing Economy” .

More generally, the appropriate fiscal policy for a small open economy that is a member of EMU is the subject of an IRCHSS-funded research project that is led by Philip Lane. You can learn more about this project here.