Readers of this blog might be interested in this working paper we’ve just put up on the Levy working paper series. The abstract is below.
We examine the relationship between changes in a country’s public sector fiscal position and inequality at the top and bottom of the income distribution during the age of austerity (2006–13). We use a parametric Lorenz curve model and Gini-like indices of inequality as our measures to assess distributional changes. Based on the EU’s Statistics on Income and Living Conditions SLIC and International Monetary Fund data for 12 European countries, we find that more severe adjustments to the cyclically adjusted primary balance (i.e., more austerity) are associated with a more unequal distribution of income driven by rising inequality at the top. The data also weakly suggest a decrease in inequality at the bottom. The distributional impact of austerity measures reflects the reliance on regressive policies, and likely produces increased incentives for rent seeking while reducing incentives for workers to increase productivity.
The Demographic Transition, which started in Europe in the late 18th century, had a huge positive impact on average human welfare. Population levels and growth rates became dependent upon societal preferences rather than upon famine and disease. The demographic transition has now spread around the world to all continents, except Africa. Surprisingly, Africa has not made the switch. Rather than seeing population growth easing and then stopping, in a typical post-demographic transition pattern, African population growth rates have stayed at a very high rate for many decades. Even in recent years, while many demographers expected a slowdown finally to take hold, African population levels have rocketed up. So for example, from the National Geographic: Continue reading “African Demographic Trends and European Policy Responses”
This paper of mine just came out in a special issue of Oxford Review of Economic Policy on the question of Scottish independence. I had been asked to reflect on Irish economic performance since independence, on the exercise of fiscal and monetary sovereignty, and on migration policy, without saying anything about Scotland.
From an earlier draft I attach a comparison of population growth in Ireland and Scotland and their respective peripheries.
There has been some comments in the media over the past week or so about changes to the way national accounts are compiled in the EU.
A good deal of this has focussed on changes relating to illegal/informal/underground economic activities. It should be noted that there is no change to the treatment of these activities in ESA2010. The definitions and conceptual approach to such activities remains exactly as it was in ESA95. The major differences between ESA95 and ESA2010 are summarised here.
Continue reading “Changes to national accounting practices”
This is exactly the kind of responsive research the Irish Central Bank should be doing. The Central Bank’s Fergal McCann takes a look at Irish SME indebtedness in the wake, presumably, of Morgan’s latest Irish Times op-ed on the subject. Fergal solves the data problem the ICB has for SME indebtedness levels using Red-C data.
There’s no doubt, I think, that there is a serious debt problem within Irish SMEs. But 34% lot of them have no debt at all, with others with very little debt relative to turnover.
McCann’s work is not of the ‘it’s grand lads, nothing to look at here’ variety, either, and it does put a shape on the problem for us.
The seriously indebted medium-sized enterprises are in trouble, though, and we now have a good measure of the likely extent of how many of these firms there are.
In a speech largely saying nothing, Mario Draghi today described how domestic demand, and absence of reforms are risks to growth. Reforms, of course, could mean anything at all, and they are the Eurocrat catch-all for ‘we don’t know’, but domestic demand is something we can measure, and it’s something the ESRI have worked a lot on recently (.pdf). Your average undergraduate knows about the relationship between employment and domestic demand, and should also be aware that credit conditions matter for the growth of the real economy.
If we look at the Irish economy, in levels indexed to Q1, 2007, the chart below shows total domestic demand and employment on the left hand axis, which I start at 60 to pull out the difference between them a bit, and, measured on the right hand axis, the bar chart shows the flow of credit advanced when you exclude financial intermediation and property.
On the last reading domestic demand is about 21% down from Q1, 2007, while employment is about 15% down from the peak in early 2008. The annual change in the employment series from Q42012 to Q42013 is about 3%, while the annual change in demand is almost 0%.
Credit advanced meanwhile is, unsurprisingly, negative, relative to Q1 2007, from Q3 2010 onwards.
I have been waiting for someone else to post on the national accounts data for 2013, available here, but no-one has yet, and it deserves a thread.
Real GDP, which as we know is mis-measured as a result of transfer pricing, declined 0.3% in 2013. Real GNP, which we learned last year has its problems too, was up by 3.4%. Nominal GDP rose by just 0.1%, which is not good for the debt to GDP ratio. Nominal GNP rose by 4%.
I guess that a marketing problem the government faces is that if it plays up the GNP numbers too much as being clearly superior, which I suppose we still believe they are (?), someone out there may start dividing our debt by GNP.