Archive for the ‘Uncategorized’ Category

Draft National Risk Assessment

By Philip Lane

Wednesday, April 16th, 2014


Comments welcome until 30th June to nra at

Martin Wolf review of Piketty

By Philip Lane

Wednesday, April 16th, 2014


CESifo Forum: Articles on Ireland

By Philip Lane

Tuesday, April 15th, 2014

The new issue of CESifo Forum has several short articles on Ireland by myself, Patrick Honohan, John Fitzgerald, Stephen Kinsella and Aidan Regan - it is here.

Who Holds Irish Government Bonds?

By Philip Lane

Friday, April 11th, 2014

New Central Bank dataset here.

George Osborne: What the Economic Pessimists Are Missing

By Philip Lane

Friday, April 11th, 2014

WSJ op-ed here.

Franklin Templeton and Ukraine

By Philip Lane

Thursday, April 10th, 2014

The FT covers its large bond position in Ukraine here.

IMF 2014 Spring Meetings

By Philip Lane

Wednesday, April 9th, 2014

The three major reports have tons of interesting material

Irish Economic Association Annual Conference Programme

By Stephen Kinsella

Tuesday, April 8th, 2014

This year’s IEA will take place on May 8th and 9th in the CastleTroy Park Hotel, Limerick. The ESR Lecture will be given by Prof. Rachel Griffith, while Prof. Jordi Gali will give the Edgeworth Lecture. The conference is full of strong papers from a diverse set of scholars.

The full programme is here.

Registration for the conference is through the exordo site. Early registration costs 95 euros and includes dinner on the 8th. There is a much lower price for student delegates at 25 euros.

Bookings for accommodation should be made directly through the CastleTroy Park Hotel, quoting “IEA2014″ for a discounted room price.

I’m looking forward to seeing you there in a few weeks.

Macro to Micro - A New Era in Financial Statistics

By Philip Lane

Sunday, April 6th, 2014

Central Bank conference details here.

White paper on universal health insurance

By Liam Delaney

Sunday, April 6th, 2014

I am a few days late on this but the government White paper on Universal Health Insurance is an important document and worth a thread here. The Irish Times have a summary here.


Some links that might be helpful

The White Paper itself:

Newspaper articles:

Here is a basic article from the Irish Times giving the details of the white paper:

Column by Muiris Houston arguing that it will never be implemented:

Piece by Billy Kelleher on the cost of universal health insurance:

Irish Independent article on opposition to the proposal:

Paul Cullen in the Irish Times: Dutch health insurance costing 23.5% of income

Universal Healthcare: Trick or Treat? ( by Catherine Wilkinson and Declan Brennan:

Article from where GPs argue that they were not adequately consulted:

Fianna Fáil opposition:

Article from on opposition from health workers:

Journal articles:

Briggs, A. (2013). How changes to Irish healthcare financing are affecting universal health coverage. Health Policy, Volume 113, Issue 1 , Pages 45-49.

McKee et al (2013). Universal Health Coverage: A Quest for All Countries But under Threat in Some.Value in Health (Elsevier Science). Supplement, Vol. 16 Issue s1, pS39-S45.

Latest Central Bank Quarterly Bulletin

By Stephen Kinsella

Friday, April 4th, 2014

The Irish Central Bank is forecasting strong growth in Ireland of about 2% in GDP in the latest quarterly bulletin (.pdf). Pages 20 and 21 should interest readers of this blog. Thomas Conefrey and Suzanne Linehan dig into the employment growth numbers in a useful box-out. As usual the report is a chart fest, which is great for the wonky folk who frequent this site, but this one caught my eye. In the figure below you’re looking at household debt relative to disposable income, but also relative to total assets in the household sector.

What is remarkable is the scale of the problem relative to other developed countries. Irish debt to disposable income is about 196%, UK debt to disposable income is about 140%, US is about 120%. Here’s a really useful paper (.pdf) by Clare Lebartz looking at the distribution of household debt by income distribution which goes into the mechanics of this buildup a bit more.

The other sharp change is the brown line, driven by an increase in household assets mainly.

Economist vacancy at TILDA

By Philip Lane

Thursday, April 3rd, 2014

Details here.

Spring 2014 Issue of ESR

By Philip Lane

Tuesday, April 1st, 2014

Vol 45, No 1, Spring (2014): with Policy Papers from ‘Future Directions of the Irish Economy’ Conference, 10 January 2014

Table of Contents


The Influence of Family Structure on Child Outcomes: Evidence for Ireland PDF
Carmel Hannan, Brendan Halpin 1-24
Socio-economic Inequalities in Child Health in Ireland PDF
Anne Nolan, Richard Layte 25-64
Minority Status, Social Welfare Status and their Association with Child Participation in Sporting, Cultural and Community Activities PDF
Bryan Coughlan, Edel Doherty, Ciaran O’Neill, Brian E. McGuire 65-85

Policy Section Articles

Ireland’s Medium-Term Growth Prospects: a Phoenix Rising? PDF
Nicholas Crafts 87-112
Ireland’s Banking System – Looking Forward PDF
Thorsten Beck 113-134
Ireland’s Fiscal Framework: Options for the Future PDF
George Kopits 135-158

Caterpillar at the US Senate

By Seamus Coffey

Monday, March 31st, 2014

The latest company to come under the spotlight of the US Senate Permanent Sub-Committee on Investigations is heavy-goods manufacturer, Caterpillar.  Here is the report prepared by the Sub-Committee staff in advance of today’s hearing.  There is also a statement from the Committee Chairman, Sen. Carl Levin (D).

The hearing will feature three panels of witnesses and will be streamed here.  The second panel comprises some representatives from Pricewaterhousecoopers.  The Sub-Committee obtained internal documents and communications between the PwC representatives which are referenced in the report.

The key feature of the US tax code that is in question is once again are the provisions that have eroded the effectiveness of the Subpart F anti-deferral regime introduced in the 1960s for passive income earned outside the US.  Under Subpart F this should trigger an immediate tax liability regardless of whether the profits are repatriated but there are a range of provisions that allow a deferral of the tax payment as is the general case with active income.  The scheme put in place by Caterpillar avails of both the manufacturing exemption and the export exemption in the US tax code.  Features such as “check-the box” and transfer-pricing rules also play a role.  Once again there is the accusation that a US company was able to negotiate a “special tax rate” in a low-tax country.

For those whose only interest is a Ctrl-F of the Senate report here is the sole mention of Ireland:

The decline in corporate tax revenues is due in part to more corporate income being reported abroad in low-tax jurisdictions. A number of studies show that U.S. multinational corporations are moving income out of or away from the United States into low or no tax jurisdictions, including tax havens such as Ireland, Bermuda, and the Cayman Islands.

Climate Change

By Brendan Walsh

Monday, March 31st, 2014

The Intergovernmental Panel on Climate Change (IPCC)’s Fifth Assessment Report (AR5) is available here.
Richard Tol’s critique published in the Financial Times is available here.

Plan B

By Seamus Coffey

Monday, March 31st, 2014

Cormac Lucey on how leaving the euro can save Ireland.

The chart accompanying the piece comes from page 51 of this 2013 Selected Issues Paper as part of the IMF Article IV Consultation with the Euro Area.

Yields on Irish government bonds

By Seamus Coffey

Friday, March 28th, 2014

It is not the first time but the estimated 10-year yield on Irish government bonds has again fallen below 3 per cent.  Here is a snap-shot of the yield curve this morning from this site.

The reasons for these historically low rates can be bounced around but it would be more useful if we could actually take advantage of them.  Ireland has an enormous public debt but the structure of it is such that very little is close to maturing and in need of rolling over.  In the EZ17 Ireland has a very low refinancing need (Latvia is excluded).


At the end of December the blended interest rate on the €22.5 billion of IMF loans that Ireland has accessed was 4.16 per cent.  These loans have a weighted average life of 7.3 years.  The above table gives an indicative rate of under 2 per cent for Irish government debt of equivalent maturity.  Two per cent of €22.5 billion is €450 million.

Replacing the official IMF loans with private funding seems attractive but the IMF loans cannot be repaid early without also triggering early repayment clauses in the €45 billion of EFSM, EFSF and bilateral loans from EU countries.  The details of these clauses are in this PQ answer.

Compared to the IMF loans, the EU loans have lower interest rates and much longer maturities.  Repaying them early would not be prudent given the uncertainties and possible unknowns that remain.  However, raising money now for loans which begin amortising next year anyway would only raise the funding target of the NTMA to the average EU levels (in GDP terms) as shown in the chart.  On the other hand it is not clear what impact such an action would have on interest rates but a significant impact would seem unlikely.

There are reasons on several sides for keeping the IMF as part of the ongoing Troika supervision of Ireland but are there €450 million worth of them?

BEPS progress by the OECD

By Seamus Coffey

Tuesday, March 25th, 2014

The OECD’s unit working on the Base Erosion and Profit Shifting (BEPS) project have been releasing documents based on the points in the Action Plan published last year.  The full set is here.

Yesterday, a discussion document for Action Point 1: Taxing the Digital Economy was published.  It is a very wide-ranging document.  One of the notable suggestions are the proposals to allow/force the greater taxation of companies selling digital products in their “market jurisdictions”.  This primarily arises from the ability of such companies to circumvent the existing rules on permanent establishment because of the intangible nature of the product.

The proposal is not a move to formulary apportionment. The document puts forward proposals to alter the existing source principle of corporation tax to try and ensure that more/some of the profits earned by these companies are attributed to the country of their customers using changes to PE rules.  Other proposals include the new concept of a “virtual” permanent establishment, the creation of a withholding tax on digital transactions and the use of consumption tax options.

There is a lot in the document and some extracts summarising the problems the OECD group are trying to tackle in this area are below the fold.  Whether there will be any effective solutions by the end of the process remains to be seen.


Post-Troika, What’s Next For Ireland?

By Stephen Kinsella

Monday, March 24th, 2014

On the 28th of March at the Aviva conference centre, a conference looking at what’s next for Ireland will take place in the context of Ireland’s new economic governance rules. The programme is here. The conference is organised by the European Commission and the Dublin Chamber of Commerce.

Behavioural Economics and Regulation

By Liam Delaney

Monday, March 24th, 2014

I have blogged before on the potential applications of behavioural economics to public policy in Ireland. A lot of attention has been given to policies that change individual behaviour in potentially welfare promoting directions (See Tim Harford’s summary of this in the FT). An interesting question is the implications of moving to a model of consumers with bounded rationality and self-control for regulation and competition policy. A number of recent documents in the UK and US are relevant for this.

This excellent FCA occasional paper examines the potential implications of behavioural economics for financial regulation. It should be noted that “nudging” is a subset of the policies that might follow behavioural market tests. Many of the potential policies discussed in this document are hard interventions rather than soft nudges. They also extend across regulators. For example, on page 45 they outline recent moves by Ofcom to ban autorenewal of internet contracts and OFT to ban certain types of gym membership contracts.

In some senses a more radical document by Barr, Mullainathan and Shafir from 2008 outlines a new approach to consumer regulation based partly on the notion of “sticky defaults” whereby firms would be required to default people into the most desirable option based on their characteristics and only move them if they make choices following being provided with clear information. Such models are discussed in relation to two markets fraught with behavioural bias and consumer exploitation, namely credit cards and mortgages. The document also sets out proposals for changing the incentives of brokers.

Far from the collection of isolated “nudges” that forms much of the public debate around behavioural economics, what has unfolded in recent years is a body of theoretical and empirical work that simply gives better predictions and foundations for regulation than what preceded. There are clearly many insights in this literature that have implications for Irish regulators and are worth debating further.

Examples of the applied questions raised by the recent literature include:

Should credit card variable and teaser rates be banned or at least taken out of the regular offers made to consumers?

Should mortgage providers be forced to disclose better deals available to their customers?

Should pay-day lenders be granted full access to the Irish market? If so, how do you regulate them?

Should autoenrolment proceed in Ireland, what provisions should be put in place so that companies do not exploit naïve consumers by charging fees well in excess of regular rates?

Do behavioural biases prevent annuities markets from functioning optimally?

Clearly, many of the above questions are more than just empirical questions or issues of economic theory. They also relate to political issues and wider issues of freedom of choice. Policies such as pension autoenrolment have proved quite popular as they are, in some sense, a win-win in encouraging savings among non-traditional savers and providing extra customers for financial providers. However many of the above policies are likely to be far more contested by interest groups and it will be good to have an open debate on their merits.


A reading list from my research blog here.

A short blogpost I prepared summarising the FCA document with some other readings on regulatory and consumer exploitation issues.

Pete Lunn at ESRI has written about policy implications in a number of documents (see recent OECD review paper here).

Thomas Piketty: Capital in the 21st Century

By Philip Lane

Sunday, March 23rd, 2014

I got the chance to read this book over the last few days - it is definitely a “must read” and a major achievement.  The Free Exchange blog is running a “book club” for this book - the various entries are here.

Financing Infrastructure

By Philip Lane

Sunday, March 23rd, 2014

A G20 priority for this year is to identify policies that can boost global growth. One priority area is to address barriers to the financing of infrastructure projects.  The Reserve Bank of Australia’s annual conference was dedicated to this theme: the papers (including my own contribution) are available here.

This week’s edition of the Economist also has an article on this topic here.

How much did you pay for your house?

By Liam Delaney

Sunday, March 23rd, 2014

Paper by Yvonne McCarthy and Kieran McQuinn on “attenuation bias” (i.e. tendency to underestimate) in recall of house prices.

IFAC: Chief Economist / Head of Secretariat

By Philip Lane

Thursday, March 20th, 2014

IFAC is recruiting.

Details here.

No tax anywhere

By Seamus Coffey

Tuesday, March 18th, 2014

Pascal Saint-Amans restates the OECD intention to tackle double non-taxation in this follow-up piece to the taxation of MNCs in the Australian Financial Review.

“The current rules legally facilitate the location of the profit in non-tax jurisdictions. In other words you can develop schemes that can put your intangibles in Singapore or Switzerland or Luxembourg while there is no activity there. You can deduct your expenses in Australia. You can put your intangibles in Singapore – where it is not taxed. You can lend money to your subsidiaries across the world so that you can erase profit in all these countries because there is excessive interest, then you locate a treasury centre in Ireland for there is no tax either. At the end of the day there is no tax anywhere.”

Economists Letter on Minimum Wages

By Liam Delaney

Saturday, March 15th, 2014

This New York Times article discusses a recent letter signed by over 500 economists arguing against the proposed increases in minimum wages in the US.

The fact that the letter itself was initiated by a party with a vested interest has generated discussion online. I will leave people to make their own minds up on that.

More interesting is why so many economists have a firm belief that minimum wage increases are a bad thing. Aside from the toy models we present to students to introduce economic principles, where is the firm empirical evidence that would lead over 500 professionals to sign their name to something like this?

As this 1982 NBER survey shows, pretty much nothing was known empirically about the employment impact of minimum wages up to that stage despite a substantial body of theoretical work. A body of empirical work that followed generally has found no effects or even positive employment effects. The most famous paper directly estimating minimum wage effects on unemployment is this Card and Krueger AER paper that finds positive employment effects. It has been cited over 1400 times and debated over and again. Another highly cited UK study finds no adverse employment effects.

There is no credible empirical study documenting increases in unemployment following changes in minimum wage legislation. Nor are there credible empirical studies linking temporal and spatial variation in unemployment to minimum wage legislation. Simply type “minimum wages unemployment” into google scholar and sample the papers from peer-reviewed journals that come up. You will find some papers showing that minimum wage effects on unemployment result from highly stylised theoretical models but no papers in high-level peer reviewed journals showing a clear negative aggregate employment effect. Please feel free to link to some credible empirical evidence in the comments if you think I am overdoing the case. Here, for example, is a meta-analysis of UK studies finding no employment effect. With the empirical literature in mind, another group of economists have signed a letter in support of minimum wage increases.

Obviously people outside of economics will cite this as another case of economists not being able to agree. But the difference is the second group can point to empirical evidence. It is baffling as to where the first group derive their confidence from.

Morgan Kelly: warns our real economic crisis will begin if ECB credit stops

By Stephen Kinsella

Friday, March 14th, 2014

Morgan’s latest Op-Ed is here, following his UCD lecture linked to by Seamus here.

Q&A: Thomas Piketty on the Wealth Divide

By Philip Lane

Tuesday, March 11th, 2014


International Financial Flows and the Irish Crisis

By Philip Lane

Tuesday, March 11th, 2014

The readership may be interested in my new paper: here.

FMC Seminar

By John Cotter

Tuesday, March 11th, 2014

FMC Seminar: Fear and Loathing in the Housing Market: Evidence from Search Query Data

Speaker: Dr. Stuart A. Gabriel (Professor of Finance at UCLA & FMC2 Collaborator)

Date: Wednesday, March 12th 2014 at 6:00 PM (All are welcome to attend free of charge)

Location: Clarion Hotel, Excise Walk, IFSC , Dublin

For further details and to register please visit the seminar webpage.
Refreshments will be available from 5.30pm. For catering purposes please register.

In this presentation Professor Gabriel will outline a Big Data approach to determining levels of housing distress. Using Google search data the presentation will document a broad-based and real-time index (the Housing Distress Index (HDI)) of housing distress. The presentation will detail the characteristics of the HDI, how it compares to other indicators of housing distress, and its predictive power in determining the extent of housing distress.