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Posts in the "Macroeconomics" category

The Productivity Puzzle and Northern Ireland

Posted on June 10, 2013 by Paul Mac Flynn

InBrief June 2013

Over the last two years, the UK economy has experienced stagnating output growth alongside increasing total employment. This counter-intuitive situation has come to be known as the "Productivity Puzzle". Northern Ireland has experienced a similar dynamic over the last two years. There is no agreement among researchers as to what may be causing this situation or whether it is a permanent or temporary feature of the economy.

This in-Brief seeks to examine the many possible causes of the productivity puzzle, their likelihood and to what extent thy apply to Northern Ireland. Whether this trend continues or not, it does pose some very important questions about the state of the domestic economy and how it may evolve in the near future.

 

The latest NERI In-Brief is here

 

Permanent link | Categories: MacroeconomicsNorthern Ireland

Investment is still the key

Posted on June 10, 2013 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

Unemployment is the biggest single problem confronting Europe today. Ireland is no exception. With one in seven out of work, here, and one in four young people either out of work or not in education or training currently we are faced with a huge challenge. President Michael D. Higgins is correct to draw attention to the challenge that this problem poses to the future of European cooperation and social stability.

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Permanent link | Categories: Government SpendingInvestmentJobsMacroeconomics

Fiscal Stimulus, Unemployment and House Prices

Posted on May 16, 2013 by Micheál Collins

Publication cover - McQuinn_Kelly_NERI_2013 - Cover image for McQuinn_Kelly_NERI_2013
Cover image for McQuinn_Kelly_NERI_2013

The latest NERI seminar, from Kieran McQuinn and Robert Kelly of the Central Bank, examined the relationship between unemployment and house prices and used this relationship to examine the impact on banking defaults / mortgage defaults of economic growth. Modelling a fiscal stimulus of €2b, they estimated that bank defaults would decrease by about €660m; a saving to the state in either reduced future bank capital injections or refunds from current capital provisions. Combined with the ESRI estimated multiplier effect, where the cost to the economy of €2b stimulus is just under €1.3b, the research points towards the real cost of an investment stimulus in Ireland today. Ignoring that this investment would be in beneficial projects which would in any event pay for themselves over time (generally these are examined over a 20 year time period), the short term cost would be about €350m for every €1bn of stimulus.

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Permanent link | Categories: Government SpendingJobsMacroeconomics

Tax Revenue Stability and Corporation Tax

Posted on May 13, 2013 by Micheál Collins

One of the lessons of the recent economic collapse (I hope!) has been the importance of a stable tax base. Total stability is impossible for a small open economy like Ireland; we will always have swings in economic performance which will alter the volume of economic transactions and tax revenues. However, policy should aim to limit exposure to tax revenue instability as well as closely monitor those areas where revenues are unstable.


Despite these lessons, we pay limited attention to the stability of the corporate tax system - one of the four main areas of exchequer revenue. Based on the recent Department of Finance Stability Programme Update (April 2013) corporation tax revenues account for 11% of total taxation income.

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Permanent link | Categories: MacroeconomicsTaxation

Households and Governments: how they differ

Posted on May 13, 2013 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

The gap between what the Government in Ireland takes in and what it spends is running at a rate of €1 billion every month. Clearly this is not sustainable in the long-run because it adds to the total amount of debt owed by citizens year after year. The total amount of debt owed by the Government on behalf of taxpayers is now well more than the size of the entire amount of goods and services produced in a year. It costs the taxpayer over €8 billion each year to 'service' this debt by way of interest payments. It is estimated that, in 2013, the cost of paying interest on this debt will account for two thirds of entire government deficit of over €12 billion.

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Permanent link | Categories: Macroeconomics

Where do we go from here?

Posted on April 29, 2013 by Tom Healy

Tom Healy, Director NERI - Tom Healy, Director NERI
Tom Healy, Director NERI

Public debate about matters of public concern in Ireland has been characterised in a number of ways. I suggest that the following traits may be stronger than elsewhere in the world and could reflect deep and enduring historical factors:

  1. There is a disproportionate emphasis on 'survival' with the consequence of a great focus on the short-term over the long-term;
  2. Intellectual discourse about values, evidence and philosophy is not given the space and priority it deserves (in short there is a certain anti-intellectualism); and
  3. Fatalism dominates the perceived choices and options.

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Permanent link | Categories: InequalityMacroeconomicsTaxation

Republic of Ireland’s economic outlook remains challenging

Posted on April 10, 2013 by Micheál Collins

Publication cover - QEO Spring 2013  - Cover image for QEO Spring 2013
Cover image for QEO Spring 2013

The Nevin Economic Research Institute has published our latest Quarterly Economic Observer (Wednesday 10th April). In it we outline our latest set of projections for the Republic of Ireland economy. These suggest a period of low-growth and high-unemployment for the next three years and include:

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Permanent link | Categories: Government SpendingMacroeconomics

Will the IT sector reduce unemployment?

Posted on January 21, 2013 by Rory O'Farrell

Employment shows sectoral shift - Employment shows sectoral shift
Employment shows sectoral shift

In November, the CSO re-estimated historical estimates of employment. This has caused to seasonally adjusted peak to now be place in Q1 2008 rather than in 2007.

 

Fundamentally the picture remains the same. There has been a sectoral shift in employment with construction hit particularly badly. There has been an increase in employment (of about 6,300 people) in the Information and Communication sector, but the amount is too small to make a big dent in unemployment.

 

For more information see the latest edition of the NERI's Quarterly Economic Facts document. Indicator 1.2a shows the sectoral change in employment.

Permanent link | Categories: JobsMacroeconomics

Conference highlights Ireland’s Unemployment Crisis

Posted on November 13, 2012 by Micheál Collins

On November 12th the NERI hosted a conference focused on Ireland's unemployment crisis. Over a series of papers the nature of the current crisis and the possible solutions to the problem were examined. The papers and presentations for the conference are now available on the NERI website.


In my own paper, the following were the key points:


Overall Summary

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Permanent link | Categories: Government SpendingIncomeInvestmentJobsMacroeconomics

Budget 2013 and onwards: choices and consequences

Posted on October 30, 2012 by Micheál Collins

The Society of Saint Vincent DePaul launched their pre-Budget document entitled 'The Human Face of Austerity' on Thursday October 25th. At the launch I spoke about the choices government have as they compile Budget 2013 and reflected on some of the context and consequences of these choices for workers and families in Ireland.


The SVP document, available on their website here, complements much of the research I am colleagues have been engaged with over the past few years on minimum living standards for Ireland. The NERI working paper on the Cost of Work provides a good overview of that research and its findings.


The slides from the seminar are here. The key points raised were:

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Permanent link | Categories: Government SpendingIncomeInequalityMacroeconomicsTaxation

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