The Irish Economy

There is no international standard for the reporting of property price indices.  However, it is still very welcome that the BIS has now made public its database on property prices for 37 countries. Details (and spreadsheet) available here.

As has been widely reported the Minister for Finance has established a Review Group on State Assets that is chaired by Colm McCarthy.

The terms of reference are:

While most comments in the media have interpreted the focus on asset disposals to refer only to privatisation, it is perfectly possible that the various state companies hold assets that might not be essential for the efficient running of these businesses and thus could be disposed of without privatisation.

In relation to privatisation it will be important not only to consider the short-run gain in funds through the sale of assets, but the longer-run impact on the competitiveness of the economy. Long-run considerations should include the loss of control of national strategic assets that would result from a sale. This might be addressed by keeping the key infrastructures such as networks in public ownership.

In some cases it might also be useful to consider a long-term lease as an alternative to an outright sale of assets, which will also yield revenue up-front but avoids the ’selling off of family silver’. Joint ownership is another option.

Looking through the list of assets to be reviewed it is hard to ignore the differences in ownership patterns with many other countries. Electricity generation, ports and airports are private in many countries.

For those who are interested, our article on the above topic is available here.

This NYT article provides an interesting account of the careers and research choices of Carmen Reinhart and Ken Rogoff.

The ESRI macro-economic forecast record has attracted some attention this week.

The Indo is unfair to Frances Ruane. The ESRI has long tried and failed to fill the gap in its expertise in finance. In 2006 and 2007, it was nigh impossible to hire an economist. Part of the problem was/is that the data on the financial sector were/are so murky.

The Irish Times is fair in its critique.

For the record, the ESRI did predict the end of the housing boom (as did most others because it was fairly obvious) but we did not foresee that this would coincide with a major international crisis in finance (again, we were not alone).

Benjamin Jones of Northwestern University has written an interesting article on how the changes in the nature of scientific research pose challenges for science policy.  You can read it here.

Summary:

Getting science policy right is a core objective of government that bears on scientific advance, economic growth, health, and longevity. Yet the process of science is changing. As science advances and knowledge accumulates, ensuing generations of innovators spend longer in training and become more narrowly expert, shifting key innovations (i) later in the life cycle and (ii) from solo researchers toward teams. This paper summarizes the evidence that science has evolved - and continues to evolve - on both dimensions. The paper then considers science policy. The ongoing shift away from younger scholars and toward teamwork raises serious policy challenges. Central issues involve (a) maintaining incentives for entry into scientific careers as the training phase extends, (b) ensuring effective evaluation of ideas (including decisions on patent rights and research grants) as evaluator expertise narrows, and (c) providing appropriate effort incentives as scientists increasingly work in teams. Institutions such as government grant agencies, the patent office, the science education system, and the Nobel Prize come under a unified focus in this paper. In all cases, the question is how these institutions can change. As science evolves, science policy may become increasingly misaligned with science itself – unless science policy evolves in tandem.

The largest finance conference in Ireland returns for its eight year; The INFINITI Conference on International Finance will be held at TCD from 14th-15th June.

In addition to the keynote and special sessions, there are over 166 papers being presented. Full details including registration are available here.

Highlights of the conference include

• Opening address by Professor Patrick Honohan, Governor of the Central Bank of Ireland (Monday 14 June)
• Roundtable on Property and Real Estate Investment, Monday 14 June, afternoon with lead speaker Professor Simon Stevenson, Director of Center for Real Estate Studies, City University Business School, London, and panel members Derek Brawn, Constantin Gurdgiev, and Peter Matthews.

• Roundtable on Investment in a Post Crisis World, Tuesday 15 June, Afternoon. Sponsored by the CFA Institute Ireland, this roundtable features: “An Update on Latest Trends in Fund Offerings” by David Hammond, CFA, Bridge Consulting,  “Major Challenges in Allocations to Irish and Emerging Markets’ Equities, Liquidity Risk and Product Innovation: The Perspective of a Pension Fund Trust” by Stephanie Condra, CFA,  Invesco Pension Consultants,   “An Update on Current Issues in the EU Government Bond Market” by Catherine McLaughlin, CFA, Irish Life and “Role of the CFA Institute and CFA Ireland in the Changing World” by Oliver McClure, CFA
• Roundtable on The Structure of the Emerging Bond Market, organized by the OECD Development Centre in collaboration with the Pontifical Catholic University of Argentina Graduate Business School. It will bring together three recent papers on the micro-structure and pricing of emerging bond markets.

166 research papers on a vast array of international financial topics. Highlights include (more…)

Macro Theorist turned Fed president Kocherlakota writes on this topic here.

The New York Times carries a profile of Ben Bernanke: you can read it here.

On the 28th May, the Geary Institute will hold a major event on “Behavioural Economics, Policy and Business” in Dublin City Centre.

The currently confirmed panelists include Liam Delaney and Colm Harmon of the UCD Geary Institute, Peter Lunn of the ESRI and author of the well-known behavioural economics book Basic Instincts, and Gerard O’Neill, Director of Amarach Research. The event begins at 2pm and ends at 4pm, and will be followed by coffee. The venue is the Institute of Bankers building on North Wall Quay.

The session will begin with a short introduction to the field of behavioural economics. This short introduction will provide a working definition of behavioural economics; a short history of the field; an overview of the major global centres and projects in the area; a description of the most widely cited applications of behavioural economics ideas to real-world problems; and a brief overview of potential applications in the Irish business and policy context.

A wide ranging panel discussion will follow, addressing such questions as:

- What aspects of behavioural economics should particularly interest business people? For example, how is behavioural economics relevant to product development, advertising and marketing? What are the potential regulatory changes emerging from this literature?

- Why should policymakers care about behavioural economics? What is the relevance of behavioural economics to such questions as how we should design taxation and regulation? Is there any role for government to protect citizens from themselves in areas such as financial services?

- What has this new literature to say about economic renewal in Ireland including its relevance to major strategic initiatives such as the Smart Economy and the Strategy for Science Technology and Innovation?

We welcome suggestions for other questions to pose during the panel discussion. There will also be ample opportunity for audience participation.

In order to help us plan the event and print registration details, we would be very grateful if people could RSVP to Emma.Barron@ucd.ie at their earliest possible convenience if they intend attending the event.

The current issue of the New Yorker has a profile of Esther Duflo.  In the article, the views of Angus Deaton on the limitations of randomised controlled trials are assessed as wondering if “someone put sand in Angus’s toothpaste”.  Readers will find the offending substance here. 

You will undoubtedly  make your own assessment of the following direct quote from Duflo in the New Yorker piece:  “I want a baby goat” she mused.  “I’ll take good care of it”.

Ben Bernanke’s speech this weekend focuses on this highly-popular area of research: you can read it here.

The FT profiles ‘Dr Realist’ - you can read it here.

The 4th Global Finance Academy (GFA) conference will taked place at the University College Dublin (UCD) Michael Smurfit Graduate School of Business on May 26th.

REGISTRATION
The 2010 conference will be held over 1 day on Wednesday 26th May 2010 at the Graduate School of Business campus in Blackrock.

The speakers include Michael Brennan (UCLA), Cal Muckley (UCD), Bart Lambrecht (Lancaster),
Christopher Polk (LSE), Matt Spiegel (Yale) and Hassan Tehranian (Boston).
The conference is free, but delegates must register by emailing the organizer, Cal Muckley (cal.muckley@ucd.ie), as soon as possible or by Friday, May 7th at the latest.

The CEP at the LSE is releasing a series of briefing notes on some of the key economic issues facing the next UK government: you can find the list here.  Among the recent contributions are Luis Garicano on financial regulation and Brian Bell on bankers’ bonuses.

The government has appointed an expert group to advise on this important issue (press release here).

What are the suggestions from the readership of this blog for this new initiative?

The profile article is here.

A couple of new papers from the IIIS may be of interest:

Philip R. Lane, Trinity College Dublin and CEPR
Gian Maria Milesi-Ferretti, International Monetary Fund, Research Department and CEPR

IIIS Discussion Paper No. 316

Abstract: We document and assess the role of small financial centers in the international financial system using a newly-assembled dataset. We present estimates of the foreign asset and liability positions for a number of the most important small financial centers, and place these into context by calculating the importance of these locations in the global aggregate of crossborder investment positions. We also report data on bilateral cross-border investment patterns, highlighting which countries engage in financial trade with small financial centers.

Patrick Honohan and Gavin Murphy
Institute for International Integration Studies, Trinity College Dublin

IIIS Discussion Paper No. 317

Abstract

Ireland had been considering a break in the long-standing currency link with sterling for some time when the ideal opportunity of a new exchange rate regime – potentially retaining the sterling link while stabilizing other exchange rates – seemed to offer itself in the form of the “zone of monetary stability in Europe” proposed by France and Germany in April 1978. Based on newly released archives, this paper reviews the evolving attitude of Irish officials and the Irish Government over the following months as the decision gradually shifted to one of breaking the sterling link and rejoining what was little more than an expanded “Snake” arrangement; the UK having decided to stay out. While financial issues were to the fore in the discussions, the final decision to join was based on a strategic vision that Ireland’s economic and political future lay with Europe rather than with the former colonial power.

There is a new CEPR report on this topic -  this VOX column provides a summary.

A distinguished group of economists have written about the implications of the global crisis for the Nordic countries and the ‘Nordic model’  - summary (and link to the full report) available here.

As reported in the FT Money Supply Blog, the Riksbank has appointed a commission of inquiry to examine risks in the Swedish property market and the implications for Swedish monetary policy: you can read the details here.

A couple of reminders:

• (Self Promotion) “A New Fiscal Framework for Ireland” by Philip Lane (SSISI event at Royal Irish Academy at 6pm; abstract of talk is here.)
• CSO Administrative Data Seminar on February 22nd at Dublin Castle: details here.

This new initiative was briefly mentioned in Saturday’s FT: its goal is to provide a mechanism for economists to provide expert advice to charitable organisations; its organisers are extremely good economists.

You can find the details here.

As suggested by one commentator, this article provides an interesting analysis of the relative merits of US versus Europe for academic economists: you can read it here.

Denis O’Brien recently seemed annoyed at the sight of academic economists blogging and twittering. I am not sure what he would make of the potential emergence of a new trend, academic economists rapping. The link below is to perhaps the first viral economics rap-song, describing the differences of opinion between Hayekian and Keynesian approaches to recession recovery. One of the authors is Russ Roberts, one of the people behind Econtalk podcasts, which are among the best resources for economics on the web. It is actually quite good but does raise the question of where all this might go. “NAMA: The Musical” would be up there for me.

link here

Look at http://www.rae.ac.uk/results/qualityProfile.aspx?id=34&type=uoa

These are the economics results for the most recent Research Assessment Exercise for the UK.

The first numeric column reports the number of staff returned in the subject for each institution: UK departments are comparable in size to many Irish ones.  On the same website, one can browse to a narrative for each department: each institution is specifically required to comment on early career researchers.  Like some Irish deparments, many UK departments are also developing new talent.

Now compare their position in the Tilburg ranking https://econtop.uvt.nl/   to Irish departments. 

Everyone still happy?

Tilburg has produced a ranking of economics departments for the whole world.  See https://econtop.uvt.nl/ .  It is based on journal publications since 2004.  The nice aspect of this website is that you can change the ranking yourself by including the journals that you like and excluding the ones that you despise.  No matter how the cookie is cut, our economics departments are abysmal.

Many congratulations to Kevin O’Rourke on being the first Irish-based recipient of the prestigious European Research Council Advanced Investigator Grant for a project to research the inter-relationships between trade, trade policy and the Great Depression: you can find out more details here.

I wrote previously on the potential relevance of behavioural economics to policy. The programme for the AEA conference this year reveals the extent to which academic economics is attempting to augment traditional models with insights from psychology. Recent popular books such as Nudge by Thaler and Sunstein, Animal Spirits by Shiller and Akerlof and Basic Instincts by the ESRI’s Peter Lunn have served to bring these ideas into the public sphere. Another upcoming book by Akerlof and Kranton attempts to bring the literature they have developed on Economics and Identity more squarely into economic debate (see George Akerlof’s IDEAS page for many of the papers the book is based on). The drive to make economics a more human discipline is discussed briefly here as a positive development by Angus Deaton. Deaton primarily addresses the issue of cognitive biases and there is a growing consensus that information processing limitations should be worked into economic models. However, the challenges posed by integrating constructs from areas such as neuroscience and identity theory are theoretically more fundamental and practically more difficult as they involve languages that most economists simply have never used or considered relevant to their domain. My point in posting this brief post is to encourage people interested in how economics relates to policy to begin to consider these academic influences and what they may imply in Ireland. The economic response to the current recession in Ireland relies in no way at all on any of these new literatures and our approach to training economists and finance professionals has largely remained unaltered by them. A good debate about how seriously we should take these literatures for policy is timely.

The CAO deadline is approaching here in Ireland.  Click here for an entertaining analysis of the returns to a college education in the United States (double click the graphic to enlarge it).  Another example of the power of graphical representation.