The Irish Economy

The idea that wage cuts would be deflationary and employment-reducing is being used in some quarters to argue against public sector wage reductions.  Herbert Grubel has a relevant short paper on the use of the Marxist “under consumptionist” argument to obtain wage increases in the US during the Great Depression.

See:

http://www.sfu.ca/~grubel/marx_,_unions_and_current_crisis.htm

The Swedish fiscal consolidation in the early 1990s is fascinating – published by Bruegel, an interesting analysis is provided by Jens Henriksson who was a participant in the process. You can download it here.

(upgraded from the comments) Ronan Lyons says:  Following on from this, two reviews of the Irish property market out this morning (14th Jan), with similar conclusions for 2008 (-15%) and prognoses for 2009 (-10%):
http://www.daft.ie/report/Daft-House-Price-Report-Q4-2008.pdf
and
http://www.rte.ie/news/2009/0114/iavi.pdf

For the daft.ie figures, the calculations underlying the percentage of total stock for sale by county are available here:
http://manyeyes.alphaworks.ibm.com/manyeyes/visualizations/irelands-property-overhang