ESRI Budget Perspectives 2010 conference

This ESRI conference is taking place this morning.

The new Governor Patrick Honohan delivered an opening address which provides an interesting analysis of the Irish economic and fiscal situation: his speech is here.

The ESRI has also released its new quarterly forecast: here.

The conference also features a number of research papers, which can be found here.

In addition,  there was a roundtable on the Commission on Taxation Report: my contribution to that roundtable is available here.

Academic Appointed to Head the Minneapolis Fed

The trend continues, with the distinguished macroeconomist Narayana Kocherlakota (Nair-ah-yah-nah Koach-er-lah-ko-tah) appointed as President of the Minneapolis Fed.   The press release is here.

He recently made a very interesting recent contribution to the debate on macroeconomics research – but his note seems to have been ‘delinked’ since the announcement of his appointment.

Academic Speculation

Patrick Honohan has now officially taken over as Governor of the Central Bank. The Sunday Business Post had this snippet yesterday:

* Much speculation about who will fill the chair of international financial economics and development at Trinity College, Dublin, shortly to be vacated by Professor Patrick Honohan when he takes up his appointment at the Central Bank.

Particularly, one wonders will the selection board be watching, the excellent forum for economic debate and general nerdy competition. Are any of the likely competitors for the prestigious Trinity gig – which is, according to those familiar with such arcana, a ‘‘proper professorship’’ posting their thoughts and learned analysis on the site? Should they steer clear and concentrate on more serious work? Should they promote their media profile? Have they been too strident in their criticisms of the government?

[at the end of this compendium article]

While I have not encountered this speculation myself,   it may be worthwhile to point out that Irish universities operate under an extensive recruitment embargo,  such that no immediate vacancy has been created by Patrick’s departure!

CSO Seminar on Business Statistics in Ireland

2nd Business Statistics Seminar – 11 November 2009

The  theme  of  this  seminar  will be transport.  Transport is not only an important   economic   sector  but  also  a  sector  of  major  social  and environmental  importance.   As  concerns over cross-cutting issues such as health, sustainable travel and energy consumption have emerged, so have the demands for data.

CSO  is  continually striving to remain relevant to data users by compiling data on emerging developments and trends.

The  seminar  provides  an  ideal opportunity to hear about some of the new data  holdings  and  reports  being  developed  by CSO and learn about some ongoing research that is making use of CSO data.
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Economists and the Crisis

As has been tracked by several previous posts on this blog, there is by now a considerable debate on what the crisis teaches us about the role of economists.

One dimension of this debate has focused on the failure by the economics profession to predict the onset of the crisis.  A second quasi-related dimension relates to the failure to sufficiently appreciate the instability of the pre-crisis financial system.  To some, these failures suggest that those economists who did not accurately predict the crisis should have no role in resolving the crisis and constructing the new post-crisis economic system.    This debate is playing out at the global level and also in relation to the domestic situation.

These are all big issues and I do not attempt to provide a comprehensive set of answers here. Nevertheless, it may be useful to make a few points.  I also mainly focus on the role of academic/research economists and the field of macroeconomics.

Continue reading “Economists and the Crisis”

Learning from the Financial Crisis: Globally and Locally

Colm McCarthy’s suggestion that an inquiry into what went wrong is gaining some level of support in political circles.  While there is plenty of material to digest in terms of what went wrong locally, there is also a lot of interest in understanding what went wrong in the international financial system.  Part of the debate concerns the role of economists, especially in terms of forecasting such crises.

A reader recommends this blog post which is critical of mainstream macroeconomic models.  Of course, Willem Buiter of the LSE issued a notorious critique a while back.

More recently,  a group associated with the British Academy wrote a letter to the Queen to answer her question to Luis Garicano of the LSE as to “if these things are so large, how come everyone missed it?”, while Robert Lucas defended mainstream macroeconomics in the Economist magazine in this article.

An important dimension of this debate is the relative roles of economists in policy organisations, the financial sector and academia in assessing the risks of a crisis and speaking out on these risks. While some of the debate has focused on the role of academic economists, it is maybe more difficult to evaluate from the outside the performance of economists in policy organisations in providing risk assessment, since their advice is often confidential.   In this regard,  the external evaluations of the performance of the IMF in previous international crises sets an interesting precedent, with the Independent Evaluation Office now playing this role on a regular basis.

In relation to Ireland,  the testimony of Kevin Cardiff of the Department of Finance at a recent Oireachtas Committee hearing is quite interesting in explaining the evolution of the thinking of the Department in the run up to the crisis.  You can read the transcript here.

Tilting at windmills

In considering how to value land under current economic circumstances answers may turn up in unexpected places. One of the most important state regulatory authorities, the Commission for Energy (CER), has taken the plunge and revised down their assumed value of land. In this case it is the site procurement cost for windmills. My colleague Laura Malaguzzi Valeri pointed me to page 41 of their document on Fixed Cost of a Best New Entrant Peaking Plant & Capacity Requirement for the Calendar Year 2010 where they say:

 “Due to the significant movements in the economy over the last year, the value of land has reduced. An independent assessment was carried out on current land values, and the RAs are satisfied that the estimate for 2010 is an reasonable reflection of the current costs.”

As a result, they have revised downward the value which they assume by 63%.

Because wind producers are price takers on the competitive wholesale market this will not affect current electricity prices. Nonetheless, the fall in land prices should reduce the long-term cost of producing wind energy, with beneficial effects for consumers.

If NAMA want to read up on the details of this valuation it can be found at:

Norman Glass

Readers of this blog might recall my support for the establishment of something modelled on the UK Government Economic Service.   I was sad to hear of the passing last week of a great Irish economist though perhaps one of the least known – Norman Glass – who was in many ways one of the architects of the GES.

The Guardian obituary is at

Norman was a pioneer in economics within policy circles.   He was the first economist in the UK Department of Health for example in the early 1970s.   But it was his time at the Treasury where he really made his impact, becoming in effect the Chief Microeconomist and the driver of the microeconomic revival at the Treasury during the early days of Blair and Brown particularly in the aftermath of the Bank of England independence move.  The development of the working families tax credit, the innovations in linking labour supply policy and welfare strategies, major initiatives in education and health – Norman was central to all of these moves and to the early success of the ‘New Labour’ era.   Norman also developed an interest in the early skills formation agenda, designing SureStart (and later became a vocal critic of what the UK Government did with that programme in letting it become bloated and without direction).   On retirement from the Treasury he went on to lead NatCen, perhaps the largest and best social research company in Europe.

Norman was a complete gentleman, quietly interested in what went on in Irish economics, hugely supportive of students and researchers who made contact with him.   He is also perhaps amongst the most influential Irishmen of the late 20th century, albeit also one of the most modest and ‘backroom’, completely anonymous in his homeland.

I thought it might be interesting to readers to learn about Norman, but in passing I can’t help but think that as we face up to the consequences of terrible decisionmaking in economic policy over the past 15 years or so, and how little evidence there is of clever thinking in economics within the Irish civil service, one of the most important figures in policy decision making and in creating the infrastructure for economics in Government in the UK system, was an Irish economist.   Knowing Norman, I suspect he would have found that funny too!

Political Science Fights Back

There is a consensus that the practitioners and discipline of economics have been key beneficiaries of the financial and fiscal crises.  The views of leading economists as to where we are and what we should do are widely sought across the media and within government. A conference organised at TCD earlier this week on the issue of political reform was part of a deliberate effort by political scientists to demonstrate the relevance of their discipline and the Irish Times has been publishing opinion pieces and articles drawing on the conference . Earlier in the week UCD’s John Coakley argued that informal institutions (in the form of political culture) have significantly shaped (and restricted) the state’s capacities. Today’s piece by Neil Collins of UCC argues that there has been a striking neglect of the potential of formal institutions in shaping effective governance. He concludes that ‘It is time for a rebalancing of academic attention from the economic to the political agenda.’

As an outsider to both disciplines it is striking that both have a good deal to say about the way that institutions matter in shaping both expectations and capacity for action. I am led to think that if a rebalancing is required then it might be towards thinking more about the way that formal and informal institutions limit what can be achieved (and deliver unintended consquences), but that a better understanding of those limits might support modest reform proposals which more effectively link the specification of desirable outcomes to the mechanisms through such outcomes might be reasonably be expected to be achieved.

Barrington Prize Lecture on May 13th

This year’s Barrington Prize Lecture on “Well-Being under conditions of abundance: Ireland from 1990 to 2007” will be given by Liam Delaney on May 13th as part of the AGM of SSISI. The meeting starts at 6pm and will be held at the Royal Irish Academy, 19 Dawson Street, Dublin 2 .

This paper examines the health and well-being of the Irish population in the late 20th century, the period popularly referred to as the Celtic Tiger. This period saw unprecedented increases in economic activity in Ireland. Using statistical data from administrative and survey sources, I examine whether this period of growth improved well-being and welfare in Ireland. The paper draws from theories of the development of societies such as those of Fogel and Easterlin, as well as theories from behavioural economics and econometric techniques to examine this question. In particular, I examine the extent to which Ireland fits into a pattern of declining correlation between GDP and well-being at later stages of development, a phenomenon known as the Easterlin Paradox. I also examine the extent to which individual well-being is predicted by income as compared to other aspects of welfare such as health and employment status. The results are discussed in the context of long-term demographic and health trends in Ireland.

I look forward to seeing you there. Of course, non-members are welcome to attend and participate in the discussion of the paper.

The AGM and Barrington Lecture of The Statistical & Social Inquiry Society of Ireland will take place on Wednesday, 13th May 2009,  starting at 6:00 pm. The order of the meeting will be:

Annual General Meeting:
I.                  Minutes of the 2008 AGM
II.                  Report & Accounts
III.                  Election of Council Members & Officers of the Society
IV.    The Barrington Lecture

Global Finance Academy Conference at UCD



at the University College Dublin Michael Smurfit Graduate Business School

May 27, 2009

The Global Finance Academy at the University College Dublin Michael Smurfit Graduate Business School would like to announce the 3rd Global Finance Academy Conference. The conference is a one-day event and our speakers include Don Bredin, Claudio Loderer, Philip Molyneux, Maureen O’Hara, Lucio Sarno, and Matthew Spiegel.

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Major Public Economics Conference at NUIG

The 10th Annual Meeting of the Association for Public Economic Theory takes place at NUI Galway between June 17th and June 20th this year. It will feature over 370 presentations from many of the most prominent economists working in public economics. Presenters include Dennis Mueller, Richard Cornes, Ted Bergstrom, Masimo Morelli and Serge Kolm and there will be plenary talks from Ehud Kalal, Hubert Kempf and Andres Mas-Colell. A preliminary programme is available on the conference web site.

The first registration deadline is May 5th after which registration fees increase by €50. There is a generous discount for students. Registration can only be completed through the conference web site.

Please contact either of the local organizers – Ashley Piggins (ashley.piggins at or Brendan Kennelly (brendan.kennelly at if you have any questions.