The NTMA has a new note that lays out the projected gross government debt over 2011-2015, the government’s financial assets and financial liabilities and the geographical composition of government debt holders: you can find it here.
The excessive flows of bank credit during the bubble, and the shortage of bank credit after the crisis, are key elements in Ireland’s current economic distress. Prior to the crisis, economists thought they understood the behaviour of bank credit flows, but we were sadly wrong. The talks at the conference next week explore the new research frontiers regarding bank credit flows and stability. The conference website now includes a google talk link where participants can pre-submit questions for the panel session, and links to some research papers associated with the presentations. There will also be an opportunity to pose questions during the conference panel session. The panel session will be chaired by Professor Karl Whelan of UCD.
There will also be opportunities for discussion/interaction during conference breaks. If you are a (quote) “faintly dim former rugby player” or a faintly dim rugby dad like me, there will be a corner of the coffee room where we can converse in whispers about the sport and its undeserved bad publicity.
Lorenzo Bini Smaghi argues that markets can mis-price sovereign default risk in this speech.
The rise in the unemployment rate reveals a grim picture of the impact of the recession. The overall unemployment rate has risen from 4.4% at the beginning of 2007 to 14.6% today. Male unemployment is now 17.3%, while unemployment among men aged 20-24 is 32.3%.
Concentrating on the situation of males in some key age groups, the first Chart shows the unemployment rates for those aged 20-24, 25-34, 35-44 and 45-54 (four-quarter moving average of the Quarterly National Household Survey rates). Unemployment rose dramatically in all fours age groups, but younger men were most severely affected.
During a deep recession unemployment rates do not tell the whole story because people tend to withdraw from the labour force, cease to search for work and are no longer classified as ‘unemployed’ according to the International Labour Office conventions.
The CSO publishes broader measures of unemployment as well as the main ILO rates. The broadest of these includes those marginally attached to the labour force and others not in education who want work and it now stands at 23%.
This broad unemployment rate is not available by age and sex. However, the ‘employment rate’ (the proportion of the population that is employed) is available by demographic group and it sheds light on labour market trends that supplement the information in the conventional unemployment rate.
The second Chart shows the employment rate in each of the four age groups. As we would expect from the unemployment figures, the fall in employment has been most dramatic among younger men. Since the end of 2009 fewer than 50% of males aged 20-24 have been classified as ’employed’, compared with over 75% as recently as 2007.
It is instructive to look at the distribution of ‘non-employed’ men between ‘unemployed’ and ‘not in the labour force’. This is shown in the following four Charts. The proportion of the population ‘not in the labour force’ is lowest among men aged 35-44 and highest among those aged 20-24. But in all four groups there has been a significant rise in non-participation during the current recession. In fact the rise in ‘non-employment’ was split approximately 3:1 between increased unemployment and increased non-participation in all groups. While some of the rise in the numbers not in the labour force may be attributable to increased retention of younger males in the educational system, most of it is likely to reflect drop-out due to discouragement and the belief that no jobs are available.
Previous research has shown that those most likely not to be employed are single males with low educational attainment living in areas of high overall unemployment. It is likely that these factors continue to increase the risk of being without work.
The rise in unemployment and fall in employment leveled off during 2011 but as in recoveries from previous recessions further improvement is likely to be slow and the adverse effects of the contraction in the economy will be felt well into the future.
Let us hope that the ‘jobs initiative’ to be announced later today can make some impression on these figures and will include measures to ‘re-activate’ those who have dropped out of the labour force as well as those who are overtly unemployed.
We do microeconomics too! From the current Farmers Journal, and apologies for the length:
Small countries can do little unilaterally to combat climate change. The planet has just one atmosphere, and every tonne of carbon dioxide, or of the other greenhouse gases, released into the atmosphere has an identical impact. It does not matter where in the world each tonne is emitted. For every tonne emitted in Ireland, about 500 tonnes are emitted somewhere else. If Ireland somehow managed to cut emissions to zero, the fate of the earth’s climate would barely be affected. The problem is global of its very nature and requires global solutions. Every country needs to accept its international obligations and indeed to encourage international agreement on faster action. But solo-runs by individual small countries aiming for very rapid emission reductions make no sense, achieve nothing environmentally but could impose serious economic costs.
Ireland has been pursuing very ambitious targets for emission reduction going beyond our international obligations, despite a sharp reduction in the measured output of greenhouse gases in 2009 consequent on the economic downturn. The 2010 figures are not yet available but chances are that emissions fell again and could remain flat until the economy begins to recover. Under current policy Ireland has been aiming for a major switch to wind-powered electricity, more bio-fuel in transport, electric cars and a long list of other emission-reducing initiatives. All of them will cost money and the overall policy pre-dates the onset of the Irish economic collapse. It is not surprising that the new government is being advised from several quarters to re-visit our emission-reduction targets, specifically to take the downturn into account and to see if excessive costs can be avoided.
A report earlier this year from the Irish Academy of Engineering argued that electricity generating capacity is no longer under pressure: reduced demand is being met comfortably given the availability of several new gas-fired plants and there is less urgency about building extra generation, at least for the next five or ten years. The report also questioned the haste in expanding the transmission system. More recently, the Economic and Social Research Institute has argued against subsidies for offshore wind projects and for reduced wind subsidies onshore. Finally the review group on State assets, as well as proposing structural changes to the electricity industry and partial privatisation, also warned against too rapid a rush into wind generation.