Ireland is finally seeing some catch-up growth

Ireland’s economy is now growing at its fastest rate in seven years, according to the latest Quarterly National Accounts.

The figures, published this morning by the Central Statistics Office, show the economy expanded by 7.7 per cent in GDP terms in the year to the end of June.

This is the strongest rate of annualised growth recorded in the economy since early 2007.

The Irish Times story is here, there is more detail here.

Comments

Paul Krugman says that's unpossible:

"As best I can tell, Ireland has been universally (that is, by all the Serious people) proclaimed a successful role model at least once a year since the crisis began. ... And yes, it seems obvious to me that Ireland keeps being proclaimed a success because it’s supposed to be a success: they did the austerity thing forcefully, with a minimum of complaints, so there must be a pot of gold at the end of that rainbow, right?"

http://krugman.blogs.nytimes.com/2013/05/29/the-neverending-irish-success-story/?_php=true&_type=blogs&_r=0

I disagree with your tone. If this is the kind of result that makes European policymakers pat themselves on the back, that's pretty pathetic, and Krugman was right to point that out.

Paul who?

Also, that Krugman post is from almost 16 months ago.

Why is that relevant?

He wasn't making a prediction, only reflecting on the status quo at the time. So, yes, the fact that it is out of date matters.

I'm not typically a Krugman defender, but nothing in that post seems unreasonable or unfair.

"The Neverending Irish Success Story"

Krugman said this: "True, Pisani-Ferry doesn’t actually say that Ireland is recovering, only that it is “set to recover”. But we’ve heard that before, and before, and before."

Now, 16 months later Ireland looks like it's recovering. It looks a lot like Pisani-Ferry were closer to being right than Krugman was.

The title of the story and the underlying tone indicate that Krugman didn't at that time believe that Ireland would recover soon. He may well have changed his mind, but his last indication is that Ireland wouldn't have a recovery in the near future. A 16 month window doesn't seem like it's long enough to qualify as a completely different economic picture, particularly since not much has changed in the European economy in that period of time.

The graph published by Ireland here seems to indicate the growth is less dramatic when you adjust for seasonal factors (http://www.cso.ie/en/releasesandpublications/er/na/quarterlynationalaccountsquarter22014/).

Those are the same numbers quoted in the release, but quarterly rather than year-ended.

Nothing at all against Ireland, virtually all of whose people I wish well, but economic magnitudes fluctuate.

So then this proves austerity was a failure and market monetarism is a success? Will Tyler have to dedicate his next book to Scott Sumner?

http://www.independent.ie/opinion/columnists/brendan-keenan/gdp-or-gnp-its-an-ecumenical-matter-29297060.html

"There is no measure of Irish economic performance which accords with reality – so the figures don't stack up"

Interesting that there is such a large gap between GNP and GDP for Ireland. The scale of FDI in Ireland is very large and opens the Irish up to zigs and zags of global capital flows.

When times are good, Ireland roars. When global investors get skittish, Ireland sinks.

Something for the Scottish to think about :)

We keep hearing how Estonia, Ireland and the UK didn't really practise austerity or that their recoveries are illusional.

But are there any Keynsean examples with fake recoveries let alone real ones?

Well, although both fiscal an monetary policy were far less stimulative than Keynesians wanted, the US has done better than the anti-Keynesian policy in the EU.

Given that the US is largely disconnected from the Eurozone crisis (and is also quite different in many other ways, such as baseline size of government), this doesn't strike me as a very useful example--at least comparatively.

Who say they didn't really practice austerity? Ireland made real budget cuts and saw no real improvement in GDP or unemployment. The U.S. ran deficits and stimulus and is now close to 6% unemployment. I'm no Keynesian but I'd say ireland is an open and shut case that austerity is a failure.

Because there could be no other underlying factors that caused the slow GDP growth or high unemployment numbers in Ireland?

No, because when you kick a can down the road, it never comes back to bite you later.

"I’m no Keynesian but I’d say ireland is an open and shut case that austerity is a failure."

If Ireland were doing significantly worse than every country that had a large stimulus, that would be an indication that austerity was a failure. However you are comparing Ireland to one other country (the US) who's stimulus was, 'too small' (per Krugman). Which isn't sufficient proof from which to derive any reasonable conclusion.

What is the counterfactual?

Ireland added the equivalent of 80% of GDP to its national debt between 2007 and 2014. I'm already factoring out the loss in output which makes the rise look more like 100%.

Could they have borrowed more? From whom and at what price?

Comments for this post are closed