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The Irish Economy Today: Albatross or Phoenix?
Author(s) -
FitzGerald John
Publication year - 2012
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2012.01481.x
Subject(s) - economics , phoenix , balance of payments , recession , government (linguistics) , state (computer science) , balance (ability) , deficit spending , current account , economy , economic policy , international economics , macroeconomics , exchange rate , debt , metropolitan area , medicine , linguistics , philosophy , pathology , algorithm , computer science , physical medicine and rehabilitation
Within EMU, the state of the balance of payments is a crucial signal of possible dangers in an economy. In the case of Ireland, this signal was ignored, and a failure of banking regulation together with wholly inappropriate fiscal policy allowed the current crisis to happen. In the aftermath of the recession, domestic costs have been cut, producing a substantial increase in tradable sector output. This output response will play a crucial role in eventually returning the economy to growth. Tackling the huge government deficit will be necessarily painful and, until completed, will weigh heavily on domestic demand, delaying a full recovery. It will be important that the fiscal adjustment is undertaken in an ‘employment‐friendly’ manner.