A busy day for CSO releases. The quarterly national accounts are published here, while the BOP data are here. In addition, the CSO released the 2006-2007 data for services trade, which can found here.
A striking feature of the data is the wide divergence between GNP and GDP for Ireland, with the most worrying data point being the 0.9 percent decline in GNP during the 3rd quarter (corresponding to an approximately 3.6 percent contraction at an annualised rate). The widening of the current account deficit, despite the slowdown, signals the external competitiveness problem.
Statcentral.ie is a new CSO-maintained data site that brings together all the CSO data, plus data from a range of other official agencies.
Brendan Walsh was the guest on the Eamon Dunphy show last Saturday. You can listen to the interview (which covers the current crisis, amongst other topics) here.
CES Ifo’s latest quarterly Forum has just appeared with a special issue on the financial crisis with articles by Hans Werner Sinn, Barry Eichengreen, Martin Hellwig, and yours truly, among others.
Download it free at http://www.ifo.de/portal/page/portal/ifoHome/b-publ/b2journal/30publforum.
My piece develops the argument that containment and resolution policy started too slowly and emphasized liquidity rather than solvency issues. True of Ireland as elsewhere. Only now are some of us coming to terms with this.
Two current policy problems for Ireland are to tackle the loss of external competitiveness and to determine the appropriate level and composition of government spending. These issues are linked, since government spending affects the real exchange rate for Ireland, through its impact on the relative price of nontraded goods in terms of traded goods.
In a new paper “Fiscal Policy and International Competitiveness: Evidence from Ireland” (joint with my TCD colleague Vahagn Galstyan), we show that the long-run behaviour of the real exchange rate and the relative price of nontradables is increasing in the long-run level of government consumption but decreasing in the long-run level of government investment.
The intuition is that government consumption tends to drive up economy-wide wages and nontraded prices (since the public sector competes for scarce labour and non-traded inputs), while government investment in the long run improves productivity (especially in the non-traded sector) which is associated with a reduction in the relative price level.
The appropriate levels of government consumption and government investment depend on a range of socio-political factors, but these results are worth noting in any debate about the connections between fiscal policy and external competitiveness.
The ECB has released its latest Financial Stability Review. From a domestic perspective, the report highlights that Ireland has seen the sharpest decline in commercial property values, from the fastest-growing market in early 2007 to the greatest contraction in 2008, with the gap growing over the course of the last few months. Similarly, the Irish residential property market is the worst performing in the euro area.
The next meeting of The Statistical & Social Inquiry Society of Ireland will take place on Tuesday, 20th January 2009, starting at 6 pm [SHARP], at the Royal Irish Academy, 19 Dawson Street, Dublin 2. The President, Dr Donal de Buitleir, will be in the chair when Mr Michael Moloney and Dr Shane Whelan (UCD) will present a paper titled Pension Insecurity in Ireland. The text of the paper is available at www.ssisi.ie, and an abstract is set out below:
The annual amount of the state subsidy to occupational and private pensions in Ireland is double that previously believed and is of the same order as the total annual payments under the state flat-rate contributory and non-contributory pension schemes. We ask: does the state get value-for-money from these subsidies? To answer the question we introduce the fair value approach to value pension entitlements. The current regulatory regime is shown to be very weak, with the security of pension entitlements of those in employment below that of investment grade debt (so the pension promise if tradeable would have junk status). We suggest and analyse measures to improve members’ security and recommend that the fair value of pension entitlements be made a debt on the sponsoring employer and that there should be regular disclosure to members of the level of security backing their pension entitlement. The former only gives a minor increase in security in an Irish context but the latter incentivises members to make other provision for their retirement. We conclude by suggesting that the state has a larger role to play in pension provision in Ireland in the 21st century than it played in the last century.