The Irish Economy

How (Not) To Do Public Policy: Water Charges and Local Property Tax

Jim O’Leary has an op-ed about the Local Property Tax in today’s Irish Times, based on his recent report, How (Not) To Do Public Policy: Water Charges and Local Property Tax, published by the Whitaker Institute at NUI Galway. The report was launched at a conference last month at NUI Galway featuring senior policymakers, public servants, academics and other experts who evaluated the strengths and weaknesses of the policy-making process in Ireland with a view to suggesting how the quality of policy-making might be improved. Highlights from that conference, including videos of Jim’s presentation and Robert Watt’s keynote speech as well as audio of the panel sessions can be found here on the Whitaker Institute website.

Economic and Social Review, Autumn 2018

The latest edition of the Economic and Social Review (Volume 49, No.3) is now available, containing the following research and policy articles:

Articles

Job Insecurity and Well-being in Rich Democracies by Arne L. Kalleberg

Economic Stress and the Great Recession in Ireland: The Erosion of Social Class Advantage by Christopher T. Whelan, Brian Nolan and Bertrand Maitre

Household Formation and Tenure Choice: Did the Great Irish Housing Bust alter Consumer Behaviour? by David Byrne, David Duffy and John FitzGerald

Policy Articles

An Analysis of Taxation Supports for Private Pension Provision in Ireland by Shane Whelan and Maeve Hally

The Precarious Position of Drug Education Workers in Ireland by Clay Darcy

10 Years On: How Ireland Has Changed Since the Financial Crisis

1:30pm, Friday, 28 September 2018

The Institute for Lifecourse and Society Building, NUI Galway

In the fateful decade since the collapse of Lehman Brothers and the Bank Guarantee of September 2008, much has happened in Ireland – financial crisis, deep recession, bailout by the ‘Troika’, a protracted period of austerity followed by vigorous economic recovery. But what has really changed over the last ten years? What developments in the financial and political system have taken place and what has been the cultural effect of the crisis? Will we repeat the same mistakes or find ways to avoid them? A major public event convened by the Moore Institute and Whitaker Institute at NUI Galway will examine these questions with a high profile group of participants, including keynote speeches by former Central Bank of Ireland governor Patrick Honohan and playwright and author Colin Murphy.

Conference Programme

14:00 – 14:05
Joint welcome
Alan Ahearne, Director, Whitaker Institute
Daniel Carey, Director, Moore Institute

14:05 – 14:15
Opening remarks
Ciarán Ó hOgartaigh, President, NUI Galway

14.15 – 14:35
Keynote speech
Patrick Honohan
former Governor, Central Bank of Ireland

14:35 – 15:35
Panel discussion
Chair: Ciarán Ó hOgartaigh

Angela Knight CBE, former Chief Executive, British Bankers’ Association
John McHale, Dean, College of Business, Public Policy & Law, NUI Galway
Frances Ruane, former Director, Economic and Social Research Institute

15:35 – 16:00 Open discussion
16:00 – 16:20 Coffee break

16:20 – 16:40
Keynote speech
Colin Murphy
Playwright and author

Chair: Alan Ahearne

16:40 – 17:45
Panel discussion
Chair: Dan Carey

Stephen Collins, former Political Editor, Irish Times
Kate Kenny, Professor, Queen’s University Belfast
Gearóid Ó Tuathaigh, Emeritus Professor in History, NUI Galway
Fiona Ross, Chair, CIÉ

17:45 – 18:00 Open discussion

This event will take place in the ILAS Building on the north of the NUI Galway campus from 1:30-6pm. A reception with light refreshments will follow the event.

The event is free and open to the public, however those who wish to attend must pre-register.

Guest post: An Ireland of Alternative Private Currencies Without Bailouts

Today, we have a guest post by Sean Kenny (Lund), who below summarises some lessons for policymakers from a recent working paper with John Turner (Queens) on the Irish banking system before joint-stock banks.

As the Irish economy continues to emerge from the financial crisis of 2008 and the controversial blanket guarantee which followed it, from the comfort of hindsight a number of decisions have been criticised by prominent commentators. In particular, the terms of the bailout package and the shouldering of bank debt by the Irish taxpayer have featured frequently in the debate. In other words, the domestic and international political machinery employed to address the collapse of the banking system was deemed by many to be inappropriate, as events unfolded all too rapidly. Over the critical weekend of the guarantee, concerns were raised that no currency would be available from ATM machines at the open of business the following Monday.

It is interesting to ponder what might have happened under such a scenario where no support mechanism, instead of an inadequate one, had existed and where money may in fact have disappeared from the economy. As my research with Professor John Turner (Queen’s University, Belfast) documents, such was largely the experience during the last Irish banking crisis of comparable scale in 1820. During this era, money consisted of alternative private bank notes which were redeemable in Bank of Ireland notes considered “as good as gold.”

No central bank existed and the Irish and British exchequers had recently amalgamated. If a private bank had lent unwisely, pushing too many of its notes into circulation, when their notes were presented for conversion at their counters, failure could quickly occur if its current loan income and reserves fell short of its short term liabilities (notes and deposits). Of course, this tendency was exacerbated by a lack of regulation on the issue of private currency, a lack of trust in the stability of small private partnership banks and a prevailing political ethos which saw no role for government involvement in ensuring financial stability.

The 1820 crisis, which began in Cork and spread north saw 40 per cent of Irish banks fail within three weeks, leaving large portions of the country with neither currency nor banks for many years. This had predictably adverse effects on the economy as investment and consumption were largely suspended. In a scene many of us are familiar with today, many bankers, consisting primarily of the politically-connected landed elite, shielded their personal estates from liquidators as their banks’ deposits and notes went unpaid, ruining whole communities in turn. In the worst affected areas, money was simply unavailable to pay wages or to engage in trade and so consumption and employment further collapsed while price falls continued as money became scarcer. As a petition signed by the Lord Mayor of Cork put it, “all confidence, as well as Trade, is suspended, there not being sufficient currency to represent property in its transfer”.

During the following five years, a twilight zone emerged from the ashes, during which an insufficient supply of private money in the form of trade bills was circulated amongst the merchant class who constantly petitioned for reform of the entire monetary and banking system. In this era of uncertainty, many survivor banks and businesses failed as debts could not be collected and the Bank of Ireland remained solely in Dublin.

The 1820 crisis marked the beginning of the end of a quarter century which one historian called a “financial pantomime” where more than 20 percent of the banking system failed on at least four separate occasions. Compared with our own age where banks are deemed “too big to fail”, this was an era in which banks were too small to survive with primitive legislation controlling their activities. So utterly decimated was the monetary and banking system following 1820, that new legislation was introduced in 1825 which replaced the small partnership banks with a system of well capitalised joint stock banks with unlimited liability for a large number of shareholders.

This revolutionised the Irish banking system and dramatically improved financial access through the coming decades. No major banking crisis was to visit Ireland again until 2008. In an age where private (crypto) currencies are being promoted as a panacea to the alleged ills of current monetary regimes, it is appropriate to recall that when private money dies, it is not only its holders and issuers who are affected when the scale of its exchange is significant. The demise of this group will reduce their investment, consumption and debt-servicing capabilities, which will in turn affect the wider economy. Instead, the utopia of a well-designed financial system in the context of a political apparatus which minimises the fallout when things go awry, then as now, remains a goal worthy of our finest endeavour.

How (Not) To Do Public Policy

Conference and launch of new report on water charges and the local property tax

1:30pm, Thursday, 13 September 2018
Aula Maxima, The Quadrangle, NUI Galway

Why do some public policy measures succeed while others fail? Why, for example, has the Local Property Tax been a policy success, while the attempt to introduce water charges was a policy disaster? What can we learn from successful and failed policies about the policy-making process in Ireland and how to make that process more effective?

This conference will gather senior policymakers, public servants, academics, and other experts to evaluate the strengths and weaknesses of the policy-making process in Ireland with a view to suggesting how the quality of policy-making might be improved. Although much analytical attention has been paid to the effects of public policies in Ireland and to the macroeconomic context in which they are set, there has been very little analysis of the policy-making process: How policies are conceived, designed, implemented, communicated, and reviewed. This conference is an attempt to address this gap. View the conference programme here.

The conference will feature the launch of a new Whitaker Institute report by economist Jim O’Leary on water charges and the local property tax. This report, meticulously researched based on exceptional access to senior policymakers, looks back forensically at these two recent policy initiatives and explores what it was about the policy-making process in each case that contributed to success or failure.

This conference is aimed at a general audience and will appeal to anyone with an interest in how public policy is made in Ireland. The event is free and open to the public, however those who wish to attend must pre-register at: https://www.eventbrite.ie/e/how-not-to-do-public-policy-tickets-48552806752

The Euro

I thought I’d take a break from Brexit and Trump, and write a Critical Quarterly column about the Euro for a change. The main point I take from it now, a few months after writing it, is that we should stop teaching our students that if a currency union faces shocks that are symmetric, rather than asymmetric, then there is no problem. The post-2008 experience teaches us that free rider problems and ideology can lead to very sub-optimal responses even to symmetric shocks.

129th Barrington Medal, 2018/2019

The Barrington Medal is awarded annually by the Council of the Statistical and Social Inquiry Society of Ireland under the auspices of the Barrington Trust (founded in 1836 by the bequest of John Barrington). The award is intended to recognise a promising new researcher in the economic and social sciences in Ireland. The award is a silver medal and €1,000. This will be the 170th anniversary of the lecture series and the recipient will be the one 129th Barrington Lecturer.

The lecture should be based on a paper of not more than 7,500 words addressing a topic of relevance to economic or social policy and of current interest in Ireland. In treating the issue of economic or social policy,
the paper may either report the findings of a statistical research study dealing with some aspect of the problem or deal with the underlying theoretical considerations involved, or preferably combine these two
approaches. It should be written in a manner that makes it accessible to non-specialists in the area. More technical material may be included in an appendix.

The paper is published in the Journal of the Society, so it should not have been published before (nor should it be published subsequently without the prior consent of the Council of the Statistical and Social Inquiry Society of Ireland). Candidates, who at the time of their submission must be not more than 35 years of age, should at least submit a detailed abstract of approximately 1,000 words on the proposed lecture, with preference being
given to full papers. A short CV and the name of a proposer who is familiar with their work should also be submitted.

The call for entries closes on September 8th. More information, including a list of past winners of the Medal since 1992, is available here and from secretary@ssisi.ie.

New Central Bank Quarterly Bulletin

The Bank released its third quarterly bulletin of the year this week (Quarterly Bulletin (QB3 – July 2018). The outlook for growth remains favourable despite significant downside risks. The economy is expected to grow (in GDP terms) by 4.5 per cent this year and by 4.2 per cent in 2019. Most of the impetus to growth is likely to continue coming from domestic sources with the unemployment rate averaging 4.8 per cent next year on the back of solid and sustained gains in employment.

A number of significant downside risks remain. These predominantly relate to the vulnerability of the economy to external shocks, namely Brexit, further increases in protectionist trade policies and any changes to international tax regimes (that could affect FDI flows). Domestically, while inflationary pressures remain contained, the gradual erosion of spare capacity increases the prospects of overheating. In particular, in the labour market, unemployment is fast approaching levels that in the past have triggered an acceleration in wage inflation.

Aside from the normal outlook for the economy, the Bulletin contains a number of Boxes on a diverse range of topics. These include pieces on the National Accounts, a new economic indicator, trade, inflation, credit and debit card returns and mortgage arrears. The Bulletin also has a signed article that looks at Irish Government investment, financing and the capital stock.

Boxes

International economic outlook (Box A – page 13)
Revisions to the CSO National Accounts (Box B – page 15)
A new monthly indicator of economic activity (Box C – page 21)
Irish exports and world demand (Box D – page 29)
Consumer prices in Ireland (Box E – page 38)

On the financing side of the economy, there are pieces on:

Credit and Debit Card Return (Box A – page 51)
Mortgage Arrears Statistics (Box B – page 59).

Signed Articles

The Bulletin includes a signed article by Hickey, Lozej and Smyth (2018), on “Irish Government Investment, Financing and the Public Capital Stock”

Negotiations and trust

I am reading Hugo Young’s wonderful This Blessed Plot (is it really possible that it is out of print? How could that possibly be?). He agrees that de Gaulle behaved “monstrously” in vetoing the UK application to join the EEC in 1963, but also makes a good case that Macmillan deserves a share of the blame too. Macmillan’s approach to the negotiations was “conditional and tentative, creeping in a state of high suspicion towards this moment of historic destiny”; the UK made it clear that it wanted to “unpick” the Treaty of Rome in certain ways and wasn’t “necessarily willing to accept the acquis communautaire” — although it was offering nothing in compensation for this. Macmillan went out of his way to emphasize the fact that the Commonwealth and the UK’s relationship with the US were central concerns for him, strengthening de Gaulle’s view that the UK did not really belong in the EEC. Nor did the UK show any great enthusiasm for joining that organisation, in case this might weaken its bargaining hand. All of this merely served to strengthen European suspicions about the UK, and not only in France, and made it much easier for de Gaulle to eventually veto the UK application (just as UK diplomatic ineptness had made it easier for him to veto Plan G some years previously).

The story is not irrelevant today. Imagine that the UK had said, in June or July 2016, that given the closeness of the vote it would seek the closest possible relationship with the EU. Imagine that it had said that avoiding a hard border in Ireland was a major priority, but that it also wanted to avoid the emergence of trade barriers within the UK. Imagine that it had said that, therefore, it would be seeking to remain within a UK-EU customs union, and that it would unilaterally commit to remaining fully aligned with all EU regulations regarding goods. Imagine that it had said that, self-evidently, this would require it to abide by all relevant ECJ rulings, and that it would naturally be willing to make a contribution to the EU budget (but nowhere near as big a one as at present, of course). And imagine that it had said that it would also be willing to sign up to a broader set of guarantees ensuring that it would not try to steal a competitive march on the rest of Europe by undermining labour and regulatory standards more generally.

It might have been quite difficult for the EU to reject such an offer outright, and there might even have been reasons for it to welcome it. The EU could have made it clear that under these circumstances there would not be free access to the EU market for services, and that this might have very negative implications for various manufacturers based in the UK for whom the provision of services to their clients is an important part of their business. It could have added that these difficulties might be surmountable if the UK accepted all four freedoms of the Single Market and paid more into the EU budget. The UK might have objected to these objections. But at least there might have been a basis for negotiation.

It seems as though the UK government may finally be inching towards a situation in which it finds itself proposing something very like the hypothetical offer outlined above. There are still mad aspects to what is supposedly being suggested, notably the proposal that the UK collect customs duties on behalf of a customs union of which it is not a member, and that goods destined for the internal UK market should potentially be allowed to face an entirely different set of tariffs. And yet, the UK is apparently proposing to remain harmonized with EU regulations for goods. We are slowly getting there.

But only very slowly, and only in the face of enormous domestic political resistance. The UK did not proactively propose the solution suggested above – it is being dragged there, kicking and screaming, since it is finally coming to realize that there is no sensible alternative (other than accepting not only a customs union but all four Single Market freedoms, or not leaving the EU at all). Its government has worked, not to build up trust, but to destroy it. Its ministers have made no secret of their disdain for the EU. The UK government has made it clear that it really does want to do free trade deals around the world, and that it really does want the freedom to regulate – or deregulate – as it chooses. Even if Her Majesty’s Government is forced by circumstances to sign up to something that precludes this, we know that this would be only reluctantly: it is quite obvious that the UK does not want this solution. And we also know from experience that its government is capable of signing a document one day, and denying that it means what it says the next.

And what this means is that there is no trust on the other side of the table; nor should there be. And that implies that even if this British government eventually comes to accept that it needs to sign up to full customs union membership, as well as full compliance with EU regulations as regards goods, an offer along those lines may not be acceptable to the EU. Indeed, it seems almost certain that it will not be.

But it is still worth asking what would have happened if clear minds and strategic thinking had prevailed in London in June and July 2016, and such an offer had immediately been proposed without any strings being attached. There would still have been those who, like de Gaulle in 1963, would have wanted to reject it, and they might still have gotten their way. (They might even have been right: I am not implicitly comparing them to de Gaulle, who clearly behaved badly.) But I am willing to bet that it would have been more difficult for them.

Economic and Social Review, Summer 2018

The latest edition of the Economic and Social Review (Volume 49, No.2) is now available, containing the following research and policy articles:

Articles

The Socioeconomic Determinants of Crime in Ireland from 2003-2012 by Stephen Brosnan

Householder Preferences for the Design of an Energy Efficiency Retrofit Subsidy in Ireland by Matthew Collins, Seraphim Dempsey and John Curtis

Decomposing the Drivers of Changes in Inequality during the Great Recession in Ireland using the Fields Approach by Cathal O’Donoghue, Jason Loughrey and Denisa M. Sologon

Policy papers

The Impact of Free GP Care on GP Utilisation in Ireland by Paul K. Gorecki

Lifting the Lid: the Private Financing of Motorway PPPs in Ireland by Dónal Palcic, Eoin Reeves and Anne Stafford

If the retired are not poor, is it right for them to keep all-day free bus passes?

There has been a considerable fuss over a suggestion for a modest scaling-back of the benefits to the retired. It was proposed that ‘free bus travel’ be available only at off-peak travel times. At all other times, free bus travel would continue to apply.

The fuss has been strikingly one-side: the proposal was denounced by politicians, interest groups and journalists. Otherwise, silence; including on this blog.

The case for this change is easily stated – rush hour is busy because of workers travelling to/from work at times they don’t control. So it is a more efficient use of the bus system that people with more discretion over when to travel, notably the retired, would use (free) buses only at other times. (Of course they could travel as paying passengers at any time.) Nearly one-tenth of passengers on the buses at rush hour use free bus passes. So either we expand the bus system or we move bus-pass holders to (free) travel at another time and release a lot of bus space.

Available information suggests this change would also improve fairness. There is considerable evidence that the retired are not poor, either in income or in wealth terms. Removing a small fraction of the bus subsidy would seem to be fair, especially if it also made the bus service work better.

The CSO’s 2013 Household Finance and Consumption Survey (Table 12) indicates that in households where the head of household was under 35, median net wealth was €4,000. For households headed by a person 65 or older, median net wealth was €348,000. It seems legitimate to conclude that the retired are not poor in terms of their net wealth. (This is hardly surprising; they have had decades more than twenty-somethings in which to save. Grey and wrinkled has a few compensations.)

For incomes, the CSO Survey on Income and Living Conditions (Table 1e) reported that in 2016 median net disposable income (adjusting for household size) was €21,387 for those aged 18-64 and not a very great deal less, €17,956, for those over 65. So for every €100 of net disposable equivalised income of the median member of the first group, the median retired person has an income of €84. The costs of the retired are surely lower than those working (mortgage, children’s education costs)? In any case, according to the report (Table 2) those aged over 65, have a lower risk of poverty (10.2% v. 16.6%) and also a lower rate of deprivation (13.1% v. 20.9%) compared to those of working age.

Given the similarity of incomes, there seems a solid basis to say the over 65s are not poor in income terms either, compared to the working age population.

Yet the older generation have various non-means-tested benefits including free bus passes. They were also essentially exempted from the post-2008 income and benefit reductions. I will leave the inter-generational aspects of the planning laws for another occasion.

Subsidies for the retired was recently raised in the UK which “continue[s] to treat pensioners as though they need free travel, winter fuel allowances and the like, despite the fact they are on average now the best-off demographic group in the country.” In a comment pertinent to the Irish case, the writer argued that amongst the UK groups needing more public funds are children and the mentally ill. If money goes to the over-65s, it will be harder or impossible to finance the other programmes.

The broader setting for this discussion is whether our prevailing redistributive and other policies in fact discriminate against younger rather than older generations. Many of the retired and soon-to-be-retired, benefitted from lower costs of going to college, drastically lower house prices, and much more generous pension schemes that today’s twenty- than thirty-somethings will have. On top of this there are pensions, free bus travel and other benefits; some of this money may have more deserving uses, not excluding healthier public finances.

From this perspective, do we redistribute income on the basis of means or, say, voting propensity? Regarding the latter, a rough calculation (exit poll age data, total turnout, and population less non-nationals) suggests that in the 2016 general election turnout was 41% for voters under 24, and 61% for those over 65.

How, then, was the bus-policy reform proposal responded to? It did not go down well! Its author was personally vilified and the proposal was drowned in ridiculous hyperbole, while more important aspects of the speaker’s policy recommendations at the conference passed unremarked. One Minister remarked that the civil servant’s suggestion was unprecedented. It’s not hard to see why.

There was the usual claim by a journalist that “free bus pass holders have contributed to the economy for decades” On that principle, shouldn’t everyone have everything free forever? (Where are our free newspapers?)

Senator Buttimer of Fine Gael demanded that the civil servant be fired. The Independent Alliance judged that this change would cause “severe hardship” and could jeopardise the ability of the retired to get to hospital. (Severe hardship? Really? No pensions, no cars, no taxis, no offspring, in Independent Alliance constituencies?)

Even the elusive Minister Ross took to the battlements to declare that the change would happen only over his dead body, although some think the Minister’s body has been alarmingly immobile since he took office. (Missing Minister.) The Minister added that this modest change was no less than “an extraordinary assault on the rights of older people.” (An extraordinary assault?)

As for the temerity of the civil servant, I believe the department he works for is called Public Expenditure and Reform. His remarks were made at a conference where the OECD recommended that Ireland needs to focus more on evaluation of the impact of public policies. The responses amounted to saying: our supporters like this policy, we are not interested in any evaluation.

This sorry episode is reminiscent of the ‘anti-expert’ commentary of members of the Bertie Ahern governments. Minister Martin Cullen in the mid-2000s dismissed warnings of economic overheating contained in an ESRI mid-term review of the public investment programme, as merely the views of ESRI ‘sandal wearers’. He insisted that the government would press ahead in the face of the advice it had itself commissioned. Ten years on, some current Ministers seem to believe much the same thing.

The retired in the population used to be poor. That’s not been true for a long time. Policy has to catch up. The Government should seek to improve the efficiency of the transport system particularly when it can be achieved at no loss of fairness. In any event, they should give a civil hearing to policy suggestions.

Complete inflexibility from the retired may leave them with few sympathisers should the large deficits in the public pension scheme require real fiscal surgery in the future.

41st DEW Annual Conference – September 14/15, Clayton Whites (Wexford)

The 41st Annual DEW Economic Policy Conference, supported by Dublin Chamber, takes place in Whites of Wexford on Friday 14th and Saturday 15th September, 2018.

The conference opens on Friday afternoon with the Cantillon Lecture delivered by Minister for Finance, Paschal Donohoe. The two other sessions on Friday deal with the all-island economy, including Aidan Gough (Intertrade Ireland) and Tom Healy (NERI), and “Ten Years Since the Crisis“, where the expert panel includes Sharon Donnery (Central Bank) and Ann Nolan (ex-Department of Finance).

Saturday morning starts with a session on Housing Supply, featuring among others Orla Hegarty (UCD) and Colette Bennett (Social Justice Ireland). Next up is an expert panel on Higher Education, with Michael Horgan (Chair, Higher Education Authority), Brigid McManus (ex-Department of Education) and Linda Doyle (Vice-Dean for Research, Trinity College Dublin).

After lunch, there are parallel sessions on the application of behavioural economics to policy and on public finances. The conference concludes with an expert panel on Ireland 2040, chaired by Robert Watt (Department of Public Expenditure and Reform), and the William Petty lecture, by another government minister.

For more on the conference, including how to book, please visit the DEW’s website: http://dublineconomics.com.

Latest Assessment Report from IFAC

The Irish Fiscal Advisory Council has published its latest Fiscal Assessment Report. The report and some additional resources are available here.

Accompanying the report is a working paper that looks at how a counter-cyclical “rainy day fund” could be incorporated in the framework of the Stability and Growth Pack. Last week, IFAC published its assessment of compliance with the Domestic Budgetary Rule in 2017 as well as an update of its Standstill Scenario which estimates of the cost of maintaining today’s level of public services and benefits in real terms over the medium term.

A bullet-point summary of the latest FAR:

A rapid cyclical recovery has taken place since at least 2014 and this is continuing at a strong pace.
Ireland’s debt burden is still among the highest in the OECD.
Negative shocks will inevitably occur in future years and there are clear downside risks over the medium term, namely those associated with Brexit, US trade policy and the international tax environment.
Improvements on the budgetary front have stalled since 2015 despite the strong cyclical recovery taking place – one that is reinforced by a number of favourable tailwinds.
Any unexpected increases in tax revenues or lower interest costs should not be used to fund budgetary measures.
The Council welcomes the Department’s publication of alternative estimates of the output gap.
The Medium Term Objective (MTO) of a structural deficit of no less than 0.5 per cent of GDP was reached in 2017.
The Council sees the fiscal rules as a minimum standard for sustainability and continues to recommend that the Government commit to adhering to the Expenditure Benchmark even after the MTO is achieved.

And on Budget 2019 in particular:

The Government should at least stick to existing budget plans for 2019 as there is no case for additional fiscal stimulus beyond existing plans as set out in the 2018 Stability Programme Update.
Estimates of the medium-term potential growth rate of the economy and expectations of economy-wide inflation for next year imply an upper limit for increasing the adjusted measure of government expenditure of 4.5%.
In nominal terms this translates into spending increases or tax cuts of up to €3½ billion (“gross fiscal space”) as the starting point for Budget 2019.
Previously announced measures – including sharp increases in public investment – mean that the Government’s scope for new initiatives in Budget 2019 will be limited.
If additional priorities are to be addressed, these should be funded by additional tax increases or through re-allocations of existing spending.
Improving the budget balance by more than planned would be desirable, especially given current favourable times, possible overheating in the near-term and visible downside risks over the medium term.

A gap in current policies for Irish financial stability

In a recent speech, the Deputy Governor of the Central Bank of Ireland, Sharon Donnery, floated the prospect that the CBI might impose Counter Cyclical Capital Buffers (CCyB) on Irish banks, in order to guard against an unstable credit build-up in the currently strong economic environment. She also used the speech to discuss current conditions in the Irish financial system and review the macroprudential regulation policies of the CBI.

In many ways, Irish macroprudential regulation has been exemplary, but there is a glaring defect. Stanga et alia (2017 and 2018) compare 26 countries regarding mortgage arrears, financial stability and macroprudential policies, and Ireland’s profile is remarkably poor. As Stanga et al. note, controlling mortgage arrears is a key objective of macroprudential policies, and Ireland has very poor performance by this metric.

Ireland’s intractable mortgage arrears problem stems in large part from its defective legal system regarding loan security, with extremely limited lenders’ rights to collateral repossession. This defect in turn limits the reliability of Ireland’s quite restrictive macroprudential policies. As Stanga et al. state in their international overview:

“Better institutions – which improve judicial efficiency and make it easier for banks to enforce their rights – reduce the level of mortgage defaults. We consider several proxies for institutional arrangements and compile an index of institutional quality (IQ). We find a significant and negative relationship between IQ and mortgage arrears, both before and after the onset of the financial crisis – the higher the average quality of institutions, the lower the average mortgage default ratio (Figure 3). Moreover, the effects of macroprudential policies and institutional quality on mortgage defaults are mutually reinforcing. As illustrated in Figure 4, the effect of the MPI [Macro Prudential Index] on defaults becomes stronger in countries with better institutions. This result suggests that the effect of tougher macroprudential policies (that reduce household leverage and ultimately deter defaults) is amplified in an institutional environment conducive to an efficient judicial system with better protection for lenders’ rights and better enforcement capabilities.”

In addition to making banks more cautious, the limited-repossession system in Ireland makes the CBI more stringent in its macroprudential squeeze on credit flows. The prospect of a future spike in mortgage defaults is a key concern for the CBI, along with the high average loss-give-default in such a scenario. Because of this, the CBI is correct to stamp down hard on any signs of substantial credit flow into the domestic housing market.

When it comes to tackling the underlying defect in the Irish system (the too-limited repossession rights of lenders) the CBI has taken the line that this is somebody else’s problem. The CBI harangues the government endlessly on tax and spend policies (which are also not strictly the CBI’s problems) but when it comes to addressing the big defect in the Irish system regarding repossession, the CBI is as quiet as a mouse.

Who is paying for this unusual Irish system of extremely-limited repossession rights? Nondelinquent mortgage borrowers pay for the limited-repossession system since their mortgage interest rate includes the expected cost of default, capturing both a high probability of default and a high loss given default. Households looking for mortgages suffer in two ways: one, the Irish limited-repossession system makes mortgages more difficult to obtain; two, the system has a knock-on effect on housing construction: property development is a high-risk business and with no guarantee of mortgage-ready buyers, developers are extra-cautious.

The net effect of the Irish limited-repossession system on housing prices is indeterminate since there are opposite effects on the demand and supply sides. Cash buyers might benefit or lose on a net basis: they lose from the decrease in house construction (hence higher prices) but benefit from reduced bidding competition against mortgage-based buyers. Existing mortgage holders (other than defaulters) lose, and prospective mortgage holders lose twice over.

At the conclusion of her speech Donnery states:

“While there are uncertainties placing a precise value on the short-term benefits and costs, in the longer-term, increasing the margins of safety in an uncertain world is of benefit to all.”

Consider a young Irish household wishing to buy a family home using mortgage finance. In exchange for a mortgage loan, they might be willing to take a chance that they lose the house in some future scenarios if things turned out badly and they could not pay the loan back. They want a house now and are willing to take a chance on the future. Such a mortgage contract is not legally available to them in Ireland nowadays, since repossession can only be enforced in ridiculously limited circumstances and, due to this legal reality, banks are not allowed to issue mortgage loans unless they are virtually default-risk-free. The young household will have to rent or live with parents, for many years into their future.

The Irish financial system, where there is virtually no chance of receiving a default-risky mortgage and even less chance that such a loan could end with repossession, is not of benefit to all. For many people in many circumstances, risk is good.

Sharon Donnery (Deputy Governor, Central Bank of Ireland) speech on macroprudential policy

The Department of Economics, Finance & Accounting at Maynooth University welcomes Sharon Donnery, Deputy Governor of the Central Bank of Ireland, who will deliver a talk on “Building resilience in the face of uncertainty – what role for policy?”, followed by a panel discussion, chaired by Bridget McNally (Maynooth University) with panelists Robert Kelly (Central Bank, Head of Macro-Finance Division), Dermot O’Leary (Chief Economist at Goodbody Stockbrokers), and Gregory Connor (Maynooth University), on Thursday 31st May 2018, at 11am – 12:15 pm, Renehan Hall, Maynooth University. R.S.V.P. EconFinAcc@mu.ie. For further information tel: 01-7083728 / 7083681

The Meeting of the Waters

The editor of Critical Quarterly bought me a drink last December and told me that he was planning a special issue on, of all things, Thomas Moore’s The Meeting of the Waters. Would I care to write an economics column on the theme?

Well, it’s one thing to write a quarterly column on whatever is interesting me at the time, another entirely to write them to order. But since we were coming up to Christmas, and since my father’s family is from Wicklow, I said yes.

You can read the result here, and while I’m not sure how much economics there is in it, I did manage to work in a reference to Sargent and Velde!

New publication from the CSO on productivity in Ireland

The CSO have a new publication, which it is intended to update annually, on productivity in Ireland. It is available here.

The analysis assesses the contribution of labour and capital to growth in Ireland and splits the economy into an MNE-dominated sector and a domestic and other sector. A breakdown using the standard NACE classifications is also provided. The first publication covers the period from 2000 to 2016 but the analysis is undertaken for a number of sub-periods, most notably 2000 to 2014, which exclude the dramatic shifts we have seen since 2015.

Here is the summary but the entire publication is well worth a look:

This publication has presented new CSO results for productivity in the Irish economy since 2000. Some key aspects of this publication are set out below.

Irish labour productivity growth averaged 4.5 percent in the period to 2016, significantly for the period ending 2014 the equivalent growth rate is 3.4 percent. This compares with an EU average of 1.8 percent for the entire period to 2016. The contribution of the Foreign sector to labour productivity growth averaged 10.9 percent over the period to 2016 and averaged 6.2 percent to 2014. For the Domestic and Other sectors, the result to 2016 was 2.5 percent to 2016 and 2.4 percent to 2014. This clearly illustrates that the impact from the globalisation events of 2015 are concentrated in the Foreign sector as there is little change in the results for the Domestic and Other sector for the two periods.

Multi-factor productivity (MFP) has played a small part in explaining Ireland’s economic growth over the entire period 2000-2016. However, when the period 2000 -2014 is examined, i.e. excluding the effects of 2015, the picture for multi-factor productivity in the Irish economy improves and this is clearly illustrated in Figure 5.6 and 5.7. Growth in MFP was higher for the Foreign sector than the Domestic and Other sector up to 2014. However, the negative result for MFP in the Foreign sector in 2015 and in the overall economy over the full period is due to the impact of the globalisation events of 2015 on capital services where no corresponding change in labour input occurred. A major aspect of Ireland’s growth, and therefore its productivity story over the period, is the growth in capital.

Ireland’s capital stock per worker has increased from €150,000 to €378,000 per worker between 2000 and 2016, an increase of 152 percent. Capital stock per worker for the Foreign sector increased by an average annual growth rate of 6.9 percent to 2014. When the period is extended to 2016, the growth rate increases substantially to almost 32 percent. For the Domestic and Other sector, the growth in capital stock per worker is around 3.5 percent for both the periods to 2014 and for the entire period to 2016. The EU average annual growth in capital stocks per worker from 2000 to 2016 was 0.6 percent. The rate of increase in capital stocks in Ireland for both the Foreign sector and the Domestic and Other sector was higher than for any country in the EU for which data are available.

As this is the first productivity publication by CSO the results are considered experimental. There is considerable scope for extending the analysis presented in this publication to more detailed presentation by economic sector or to more detailed analysis of labour quality, i.e. gender, education, employment etc and their impacts on productivity. We look forward to a full engagement with our stakeholders to assist in setting priorities for future work in this area.

Conniffe and Norvartis Prizes

The annual conference of the Irish Economic Association was held on the 10th and 11th of May at the Central Bank. More than 160 people attended the conference.

Alejandra Ramos (TCD) was awarded the Conniffe Prize for best paper by a young economist at the conference. Alejandra received the prize for her paper titled “Household Decision Making with Violence: Implications for Transfer Programs”.

Benjamin Elsner (UCD) and Florin Wozny (IZA) won the Novartis prize for the best paper in Health Economics at the conference. The winning paper was titled ” The human capital cost of radiation: Long run evidence from exposure outside the womb”

Prof Wendy Carlin (UCL) and CORE gave the ESR lecture “The Econ 101 paradigm is broken – what is the alternative?” Her slides from the talk

IEA Dublin ESR Guest Lecture 2018

Prof Olivier Blanchard (Peterson Institute) gave the Edgeworth lecture “Should we reject the natural rate hypothesis” His slides from the talk

Edgeworth Lecture IEA 2018

On the IEA website there are plenty of pictures from the conference

http://www.iea.ie/category/latest-news/

Gerard O’Reilly

Central Bank of Ireland: Financial Stability Notes

The Central Bank of Ireland has today published its first Financial Stability Note. This new series will cover financial stability related topics including those relating to risks and vulnerabilities facing the Irish and European financial system.

The Note, ‘Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017’, by Christina Kinghan, Paul Lyons and Elena Mazza, provides an overview of new residential mortgage lending in Ireland in 2017. It describes key loan and borrower characteristics of loans subject to the Central Bank’s Mortgage Measures along with a comparison to lending in 2016. The Note also provides details on loans with an allowance to exceed the loan-to-value (LTV) and loan-to-income (LTI) limits, as permitted under the Measures. 35, 472 new loans are examined, with a value of €7.4 billion.

The key findings of today’s Financial Stability Note are:

First-time-buyers (FTBs) in 2017 had an average LTV of 79.8% and an average LTI of 3 times gross income. This represents a marginal increase on the average LTV and LTI ratios reported in 2016. FTBs also had a larger loan size, property value and income compared to FTBs one year earlier (see Table 4).
The average loan size and property value of second and subsequent buyers (SSBs) also increased compared to 2016. The average LTV for SSBs in 2017 was 67.6% and the average LTI was 2.6 times gross income (see Table 5).
A higher proportion of loans for both FTBs and SSBs were originated on a fixed interest rate compared with one year earlier.
17% of the aggregate value of SSB lending exceeded the SSB LTV limit.
18% of new primary dwelling home (PDH) lending exceeded the 3.5 LTI cap. This corresponds to 25% of the value of FTB lending and 10% of the value of SSB lending. A larger share of LTI allowances was accounted for by FTBs (74%) relative to SSBs (26%).
Allowances to exceed the LTI and LTV caps were allocated to borrowers in all four quarters of 2017 (see Table 7).

Irish Postgraduate and Early Career Economics Workshop

See below for the programme for the return of the Irish postgraduate and early career economics workshop (previously “ISNE conference”). All are welcome to attend. Thanks to School of Economics in UCD for providing financial support.

Irish Postgraduate Early Career Economics Conference

UCD Geary Institute

Friday May 4th

9am to 915am: Opening Remarks: Professor Liam Delaney (UCD), Dr. Lisa Ryan (UCD), Dr. Ben Elsner (UCD), Dr. Michelle Queally

Session 1a: 915am to 1045am	Session 1b: 915am to 1045am
Sanghamatira Mukrhrejee (UCD) “Factors influencing early electric vehicle adoption in Ireland”.	Aine Doran (QUB) “Population Dynamics in 19^th century Ireland”.
Bryan Coyne (TCD) “The impact of a subsidised weatherisation scheme on Irish domestic energy consumption”.	Gayana Vardanyan (TCD) “The long-run impact of historical shocks on the decision to migrate: evidence from the Irish Famine”.
Martin Murphy (ESRI) “Predicting farm’s non-compliance with regulations on emissions of nitrates”.	Man Wing (Lorraine) Wong (UCD) “The effect of language proximity on the labour market outcomes of the asylum population in Switzerland”.

10.45am to 11am Coffee
Session 2a: 11am to 1230pm	Session 2b: 11am to 1230pm
Florian Gerth (CBOI) “Entry and Exit Dynamics of UK firms in the wake of the Global Financial Crisis”.	Patrick McHale, BA (NUIG) & Thomas Plunkett, B.Pharm (NUIG) “Healthy Eating Meal Plan Preferences Amongst a University Population: A DCE Approach”
Tammana Adhikari (UCD) “Deals versus Rules?”.	Kenneth Devine (UCD) “Mortgage Choice and Expectations”.
David Jordan (QUB) “Doomed to decline?: Interwar industrial performance and policy in Northern Ireland”.	Ivan Petrov (UCD) “Information Asymmetry, Split Incentives, and Energy Efficiency in the Residential Rental Market”.
1245pm to 130pm Lunch
Session 3a: 130pm to 3pm	Session 3b: 130pm to 3pm
Dora Tuda (TCD) “Does higher unemployment increase income inequality: evidence from European labour markets using a discrete choice experiment”.	Iordanis Parikoglou (UCD/Teagasc). “The impact of innovation on farm level productivity: evidence from the Irish dairy sector”.
TBC	Stefano Ceolotto (TCD). “The impact of moral licensing on pro-environmental behaviours”.
Philip Carthy (ESRI) “Is employment growth affected by the introduction of broadband services?: Evidence from Ireland”.	Linda Mastrandrea (UCD) “Linking retail pricing policy with the decarbonisation of the electricity sector”.
Coffee 3pm to 315pm
Session 4a: 315pm to 445pm	Session 4b: 3pm to 445pm
Deirdre Coy (UCD) “Health formation in an RCT Early Childhood Visiting Programme”.	Eoin Corrigan (UCD) “Capricious Redistribution: The Scale and Impacts of the Local Authority Rent Subsidy”.
Anne Devlin (QUB) “Why is work-limiting disability in Northern Ireland so high?”.	Stephen Byrne (CBOI) “Solving the wage puzzle: Does the ‘nonemployment rate’ explain wage dynamics?”.

41st Annual DEW Economic Policy Conference

The Dublin Economics Workshop (DEW) is holding its 41st annual Economic Policy Conference in the Clayton White’s Hotel in Wexford on 14/15 September 2018.

At this stage, the DEW is inviting submissions on the following six topics:

All-island economy
Transport & infrastructure
Higher education
Diversity
Behavioural economics – application to policy
Housing supply

All speakers will be asked to present for 15 minutes each. While a paper is not mandatory, it is preferred. If you would like to submit, please send a short abstract (c.300 words) to sarah@dublineconomics.com by 5pm on Friday 11th May.

Revenue Annual Report 2017 and New Research

This morning Revenue published our Annual Report for 2017. The report contains lots of information on Revenue’s activities and outputs last year that contributed to the collection of €50.8 billion in net receipts for the Exchequer, as well as delivering on service to support compliance, the implementation of customs controls and facilitation of trade.

Also published today are a series of research papers that may interest readers of this blog:

Updated Corporation Tax research profiles tax payments received in 2017 as well as analysis of 2016 tax returns. This includes significant new analysis of multinational companies in Ireland.

An analysis of Income Dynamics and Mobility based on Revenue micro data. This examines the distribution of incomes by decile and percentile as well as tracking mobility of income earners over time.

Profiles of Excise Duty and Capital Taxes receipts. Excise, Capital Acquisitions Tax , Stamp Duty, Capital Gains Tax and Local Property Tax cover wide ranging activities, transactions and products. The profiles document these in detail and show changes in core components in recent years. For the first time, information on capital taxes are combined together with location and earnings data to present new perspectives on the taxes.

Revenue’s latest customer survey, of small to medium sized enterprises in 2017, is Revenue’s fourth SME survey. Responses show that customer satisfaction with Revenue service remains high across a range of headings. The survey also includes a behavioural experiment to test the impact of personalisation on response rates.

Also published is the annual illegal tobacco survey results for 2017 and the first quarterly Local Property Tax statistics for 2018.

Bringing the Household Back in: Comparative Capitalism and the Politics of Housing Markets

Some readers might be interested in this new working paper at UCD’s Geary Institute. http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201807.pdf

The core argument is that to understand heterogeneity in house price inflation, it is vital to understand the interactive dynamics in two markets that determine homeownership: First, the labor market, which shapes households’ incomes and; second, the market for mortgages, which shape households’ access to credit financial resources.

SSISI Annual Symposium – Ireland 2040

The Statistical and Social Inquiry Society of Ireland will host its annual symposium this Thursday, 26th April 2018 at 5:30pm, in Chartered Accountants House, 47/49 Pearse Street, Dublin 2.

The topic of the symposium is: ‘Where’ will the Economy be in 2040? Delivering on the National Planning Framework

Speakers include:

Professor Henry Overman, London School of Economics and Director of the What Works Centre for Local Economic Growth
Paul Hogan, Senior Adviser at Department of Housing, Planning & Local Government and project manager for the National Planning Framework
Dr. Ronan Lyons, Assistant Professor of Economics at Trinity College Dublin

As ever, non-members are welcome to attend and participate in the discussion.

IEA 2018 – Preliminary Programme

IEA 2018. May 10 and 11 at the Central Bank’s headquarters in North Wall Quay. Please note Early Bird registration is open until April 25.

DAY 1: THURDSAY MAY 10^TH 2018

Registration: 8:30-9:00

Session 1: 9:00 to 10:30

1A Public Economics (1)

· Respect your elders: evidence from Ireland’s R&D tax credit reform (Rory Malone, UL)

· Paying over the odds at the end of the fiscal year: Evidence from Ukraine (Margaryta Klymak, TCD)

· The Direct and Spillover Effects of Taxation: Evidence from a Property Tax Break for First-Time Buyers (Enda Hargaden, Univ of Tennessee)

· Follow the Leader? The Interaction between Public and Private Sector Wage Growth in the UK (Arno Hantzsche, NIESR)

1B Financial Economics (1)

· Positive Liquidity Spillovers from Sovereign Bond-Backed Securities (Peter Dunne, CBI)

· A Multi-Century Perspective on Return Predictability and Price Bubbles (Don Bredin, UCD)

· Regulatory Penalties and Reputational Risk: Evidence from Systematically Important Financial Institutions (Sharadha V Tilley, DIT)

· Resolving a Non-Performing Loan crisis: the ongoing case of the Irish mortgage market (Fergal McCann, CBI)

1C Economics of Health and Education

· The Human Capital Cost of Radiation: Long-Term Evidence from outside the Womb (Benjamin Elsner, UCD)

· School Tracking and Mental Health (Mika Haapanen, Univ of Jyväskylä)

· Household Decision Making with Violence: Implications for Transfer Programs (Alejandra Ramos, TCD)

· Heterogeneity in Early Life Investments: A Longitudinal Analysis of Children’s Time Use (Slawa Rokicki, UCD)

Coffee: 10:30 to 11:00

Session 2: 11:00 to 12:30

2A Economic History (1)

· Rise and Fall in the Third Reich: Social Mobility and Nazi Membership (Alan de Bromhead, QUB)

· The Economic Geography of Late Industrialisation: Local Finance and the Cost of Distance in Imperial Russia (Marvin Suesse, TCD)

· Perfect Mechanics: Artisan Skills and the Origins of the Industrial Revolution. (Morgan Kelly, UCD)

· Economic Policy and the Common Good (Rowena Pecchenino, NUIM)

2B Applied Micro (1)

· Determinants of households’ switching demand and execution (Shane Byrne, CBI)

· The Take-Up of Medical and GP Visit Cards in Ireland (Claire Keane, ESRI)

· Dodging the deadweight death-spiral: Efficiency and equity implications of UK electricity tariff reform (Niall Farrell, Univ of Oxford)

· The education, work and fertility decisions of women (Barra Roantree, IFS)

2C Monetary Policy and Asset Pricing

· Monetary Policy Shocks and Bank Lending: Evidence from the euro area and United States (David Byrne, CBI)

· The political economy of reforms in central bank design: evidence from a new dataset (Davide Romelli, TCD)

· Commodity pricing: Evidence from Rational and Behavioural Models (Don Bredin, UCD)

Lunch: 12:30 to 13:30

Session 3: 13:30-15:00

3A Economic History (2)

· Patent Costs and the Value of Invention: Explaining Patenting Behaviour between England, Ireland and Scotland, 1617-1852 (Stephen Billington, QUB)

· The Impact of the Great Irish Famine on Irish Mass Migration to the USA at the turn of the twentieth century. (Gayane Vardanyan, TCD)

· The impact of depression and deglobalization on agricultural outcomes: Insights from interwar Ireland (Tara Mitchell, TCD)

· Poverty and Population in Pre-Famine Ireland (Alan Fernihough, QUB)

3B Multinational Firms

· America First? A US-centric view of global capital flows (Martin Schmitz, ECB)

· Corporate Taxation and the Location Choice of Foreign Direct Investment in the EU Countries (Iulia Siedschlag, ESRI)

· U.S. corporate income tax cuts: Spillovers to the Irish economy (Daragh Clancy, ESM)

· The contribution of foreign companies to the business economy and corporate income tax base in Ireland (Seamus Coffey, UCC)

3C Financial Economics (2)

· Clearinghouse-Five: Determinants of voluntary clearing in European derivatives markets (Pawel Fiedor, CBI)

· The Implications of Tail Dependency for Counterparty Credit Risk Pricing (Juan Carlos Arismendi Zambrano, NUIM)

· Money Market Funds and Unconventional Monetary Policy (Jacopo Sorbo, CBI)

· What ‘special purposes’ explain cross-border debt funding by banks? Evidence from Ireland (Eduardo Maqui, ECB)

Coffee: 15:00-15:30

Session 4: 15:30-16:45

4A Macroeconomics of the Irish economy

· Disentangling Credit Shocks in the Irish Mortgage Market (Michael O’Grady, CBI)

· Inside the “Upside Down”: Estimating Ireland’s Output Gap (Eddie Casey, IFAC)

· Modelling External Shocks in a Small Open Economy: The Case of Ireland (Graeme Walsh, CBI)

4B Labour Economics (1)

· Employment and Hours Impacts of the National Minimum Wage and National Living Wage in Northern Ireland (Duncan McVicar, QUB)

· Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland (Paul Redmond, ESRI)

· Taxpayer Responsiveness and Statutory Incidence: Evidence from Irish Social Security Notches (Enda Hargaden, Univ of Tennessee)

4C Measurement & Methods

· Macro and Micro Estimates of Irish Household Wealth (Mary Cussen, CBI)

· New Characteristics and Hedonic Price Index Numbers (Peter Neary, Univ of Oxford)

· Patterns of Firm Level Productivity in Ireland (Luke Rehill, DoF)

17:00-19:00

Economic and Social Review Guest Lecture: Professor Wendy Carlin (University College London and the CORE Project)

19:30 Dinner at ELY IFSC, CHQ Building
DAY TWO: FRIDAY MAY 11^TH

Session 5: 9:00-10:30

5A Macroeconomic Modeling

· Shadow Bank run: The Story of a Recession (Hamed Ghiaie, Universite de Cergy-Pontoise)

· Real exchange rate dynamics in New-Keynesian models – The Balassa-Samuelson mechanism revisited (Maren Brede, Humboldt-Universität zu Berlin)

· Factor Misallocation and Adjustment Costs: Evidence from Italy (Robert Goodhead, CBI)

· The Effect of Rents on Wages when Labour is Mobile Across Regions (Matija Lozej, CBI)

5B Banking

· EU banks and profit shifting: preliminary evidence from country-by-country reporting (Wildmer Daniel Gregori, EC)

· Cross-border banking in the EU since the crisis: what is driving the great retrenchment? (Lorenz Emter, CBI)

· Banking crises and investments in innovation (Oana Peia, UCD)

· Pockets of risk in European housing markets: then and now (Jane Kelly, CBI)

5C Agriculture & natural resources

· Sea bass angling in Ireland: a structural equation model of catch and effort (Gianluca Grilli, ESRI)

· Understanding Farmer’s Valuation of Agricultural Insurance: Evidence from Viet Nam (Anuj Singh, TCD)

· Accounting for technology heterogeneities and policy change in farm level efficiency analysis: an application to the Irish beef sector (Maria Martinez Cillero, ESRI)

· The impact of residential ‘weatherisation’ schemes on the domestic energy consumption of Irish households (Bryan Coyne, TCD)

Coffee: 10:30-11:00

Session 6: 11:00 – 12:30

6A International Trade

· The Heterogeneous Impact of Brexit: Early Indications from the FTSE (Ron Davies, UCD)

· Research Dissemination, Distance and Borders (Lukas Kuld, TU Dortmund)

· What’s Another Day? The Impact of Non-Tariff Barriers on Trade (Jonathan Rice, Central Bank)

· Imported Intermediate Goods and Incomplete Exchange Rate Pass-Through into Export Prices (Alexander Firanchuk, TCD)

6B Macroprudential Policy

· An Early Warning System for Systemic Banking Crises – A Robust Model Specification (Michael Wosser, CBI)

· The effectiveness of macroprudential policies in the euro area (Eóin Flaherty, CSO)

· Macroprudential Policy, Uncertainty and Household Savings Behaviour (Conor O’Toole, ESRI)

· Credit Booms, Macroprudential Policy and Financial Crises (Peter Karlström, Univ of Bologna)

6C Political Economy & Institutions

· Ebola, Resistance and State Legitimacy (Matthias Flueckiger, QUB)

· Does Corruption Ease the Burden of Regulation? National and Subnational Evidence (Robert Gillanders, DCU)

· Can labour market institutions mitigate the China Syndrome? Evidence from regional labour markets in Western Europe (Jan-Luca Hennig, TCD)

· Refugees, migrants and the right-wing vote share: evidence from Sweden (Rachel Slaymaker, ESRI)

Lunch: 12:30-13:30

Session 7: 13:30-15:00

7A Econometrics and Forecasting

· Forecasting with FAVAR: Macroeconomic versus Financial Factors (Alessia Paccagnini, UCD)

· Forecasting Irish Inflation after the crisis: Evaluating Multiple Bayesian Approaches (Shayan Zakipour-Saber, CBI)

· Model Averaging in a Multiplicative Heteroscedastic Model (Alan Wan, City Univ of Hong Kong)

· Phillips curves in the euro area (Laura Moretti, ECB)

7B Macro-finance

· Financial Crises, Macroeconomic Shocks, and the Government Balance Sheet: A Panel Analysis (Matteo Ruzzante, Universidade Nova de Lisboa)

· Is Macroeconomic Uncertainty or Policy Uncertainty Priced in UK Stock Returns? (Jun Gao, UCC)

· Eurobonds: A Quantitative Analysis of Joint-Liability Debt (Vasileios Tsiropoulos, CBI)

· Constructing A Financial Conditions Index for the United Kingdom: A Comparative Analysis (Sheng Zhu, UCC)

7C Applied Micro (2)

· Crime Highways: the Effect of Motorway Expansion on Burglary Rates (Kerri Agnew, TCD)

· Consumer Switching in European Energy Markets: A Comparative Assessment (Jason Harold, ESRI)

· Expectations of future care needs and wealth trajectories in retirement (Rowena Crawford, IFS)

· Expected Child Mortality, Fertility Decisions, and the Demographic Dividend in Low and Middle Income Countries (Mark McGovern, QUB)

Coffee: 15:00-15:30

15:30-17:15

Edgeworth Lecture: Professor Olivier Blanchard (MIT and Peterson Institute for International Economics)

17.30

Irish Economic Assocation AGM

New Central Bank Quarterly Bulletin Published

The Central Bank published the Quarterly Bulletin (QB 2 – April 2018) today. The economy continues to perform well with the growth outlook revised upwards by close to half a percentage point to 4.5 per cent on average in 2018/19 (relative to the last set of forecasts in January). This outlook is underpinned by robust domestic demand, solid prospects for the labour market and a supportive international environment. At the same time however, a number of significant tail risks remain. These predominantly relate to the vulnerability of the economy to external shocks, namely Brexit related exposures, any increase in protectionist trade policies, changes to international tax regimes (that could affect FDI decisions) and disruptive exchange rate movements.

Some of the forecast highlights within the Bulletin include:

labour market – we now see the unemployment rate falling below 5 per cent to average 4.8 per cent in 2019, with close to 99,000 additional jobs being created this year and next. Annual employment growth is expected to average 2.2 per cent in 2018 and 2019, moderating from growth rates of close to 3 per cent in recent years
domestic spending – underlying domestic demand (which attempts to strip out much of the noise in some of the components of investment) is forecast to grow by 4.3 per cent per annum in both 2018 and 2019
trade – net exports are expected to support growth over the forecast horizon.
inflation – consumer prices were subdued last year but we expect some pick-up towards closer to 1 per cent in 2018 and 2019, as the effects of past sterling weakness unwind coupled with strong domestic demand.

Aside from the normal commentary and forecasts for the economy, the Bulletin contains Boxes on:

International economic outlook (Box A – page 11)
Sterling depreciation (Box B – page 14)
Leading indicators of new housing output (Box C – page 17)
Vacancies and wage growth (Box D – page 22).

On the financing side of the economy, there are pieces on:

Trends in Bank Lending to SMEs (Box A – page 35)
Exposures of Irish-Resident Investors to Offshore Financial Centres (Box B – page 40).

Signed Articles

The Bulletin includes two signed articles by Donnery, Fitzpatrick, Greaney, McCann and O’Keeffe (2018), on “Resolving Non-Performing Loans in Ireland 2010-2018” and one by Conefrey and McIndoe-Calder (2018) on “Where are Ireland’s Construction Workers?”

Irish Economic Association Annual Conference 2018 – Registration Open

Registration is now open for the IEA Conference, to be held in the Central Bank on North Wall Quay in Dublin, May 10 and 11.

Authors, and those not presenting but interested in attending, can log in at the following address to register and pay the conference fee.

https://iea2018.exordo.com/

Post Doctoral Researcher in Innovation Studies and Policy

May I draw your attention to the following post:Post Doctoral Researcher in Innovation Studies and Policy (funding for this position is expected to continue for 2 years) based at the University of Limerick, Ireland as part of a Science Foundation Ireland funded project under its Science Policy Research Programme.

Led by Professor Helena Lenihan at the Kemmy Business School, University of Limerick, this project on evaluating the impact of science and innovation policies on the economy and society comprises a team of international and national experts (including collaborators from Warwick Business School and the Enterprise Research Centre, ZEW in Germany, KU Leuven and Queen’s University, Belfast) and policymakers.

Salary Scale: €36,854-€42,603 per annum.

Deadline for Application: Friday 20^th April 2018

A full description of the advertised position and application procedure is available here

New ‘Economics of Property Market’ online course at TCD

There is widespread agreement that Ireland lacks the housing policy expertise to solve its current housing woes. For example, Donal MacManus of the Irish Council of Social Housing made the case recently for third-level education in housing, given the small number of people with accredited housing policy expertise in this country.

To help address this skills gap, Trinity have developed an online course entitled The Economics of the Property Market. It is aimed largely at professionals without any formal training in economics whose work involves property/housing, including valuers, architects, engineers, solicitors and accountants, but is open to anyone with an interest in the property market.

The online course takes place April-June and comprises four sessions, which look separately at: understanding markets; the demand for property; the supply of property; and the economics of property market policy. More information, and a link to sign up for the course, is given at this link:
https://www.tcd.ie/Economics/CPD/index.php

The deadline for registering is Friday April 13th, the course is live on April 30 and all participants are expected to complete the four sessions within six weeks. Those who have further questions can contact me (firstname.surname at tcd.ie).