Ireland climbed out of recession on Wednesday with the economy
returning to growth in the first quarter [2.7 percent], after suffering one of the
deepest downturns of any advanced industrialised economy.
Don't get too giddy with optimism: the Irish economy had declined fifteen percent. Still, it's far too early to judge the Irish experiment in pre-emptive fiscal austerity to be a failure. The full story is here.
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GNP is the relevant number for Ireland, not GDP. It was nonsense to talk about GDP in the good times and it’s nonsense to talk about it now.
On the other hand, business *is* picking up – I run a very small web business and we’ve had much more success in sales in the last six months than in the previous twelve. It’s a story I’ve heard from other people in a similar situation.
The question is how much has the “austerity” – is it really austerity when you’re adding huge amounts of government debt to save investment banks? – has slowed down the recovery and what damage it will do to the recovery in the future.
It is uncertain if austerity will work in Ireland. But it is an interesting experiment.
A source on Irish economic policy
http://www.irisheconomy.ie/index.php/tag/ireland-fiscal-policy/
I was lucky to sell my Irish real estate near the peak – it was insane that Dublin had become, by some measures, more expensive then New York.
In any case if Ireland had stayed off the Euro they would be much better off.
Benny Lava, I don’t know if Tyler has championed austerity, but your argument is deeply flawed. Such a simplistic comparison tells you nothing about any given policy when the differences are so varied and profound.
Ireland = small open economy, so stimulus goes to countries that make our consumer goods, not to promote activity in our most productive sectors, which are exporters (pharma/tech/agri). The multiplier is really low. Opponents of austerity here are mostly clamouring for the protection of terms and status for the public sector.
Irish Growth
http://online.wsj.com/article/SB10001424052748703426004575338433422665358.html?KEYWORDS=ireland
Krugman thinks they have austerity.
All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.
http://krugman.blogs.nytimes.com/2010/06/29/a-terrible-ugliness-is-born/
Ireland is not really a model for the United States but California and Illinois might want to look
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