Lecture 11

Ireland in the EUYesterday, Today, Tomorrow

Stats

Story so far

Ireland & EU

Irish Economic Statistics

1960 1970 1980 1990 2000Year

5000

10000

15000

20000

25000

30000

Real GDP Per Capita

Irish Real GDP per Capita, 1950-2005. Source: Penn World Tables v. 6.2, CSO.ie, and author's calculations. Penn Data available here, CSO data available here.

Irish Real GDP Growth 1990-2005

http://www.esri.ie/irish_economy/

http://www.esri.ie/irish_economy/

http://www.esri.ie/irish_economy/

0

10

20

30

40

50

60

70

80

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

% of 15-64 age group

Males Females

Ireland: Employment rates, 1996-2005

0

2

4

6

8

10

12

14

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

% of labour force

EU 25 Ireland

Ireland & EU Unemployment Rates, 1996-2003

0

10

20

30

40

50

60

70

80

90

100

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

% of GDP

EU 25 Eurozone 12Ireland (% of GDP) Ireland (% of GNI)

General Government Debt, EU and Ireland

http://www.cso.ie/releasespublications/measuringirelandsprogress2005.htm

0.000.200.400.600.801.001.201.401.60

1999 2000 2001 2002 2003 2004 2005

value of €1

US dollar Pound sterling 100 Japanese yen

1 Euro’s worth in bilateral exchange rates, 1999-2005

- 6

- 4

- 2

0

2

4

6

1996 1997 1998 1999 2000 2001 2002 2003 2004

% of GDPEurozone 12Ireland3% of GDP deficit limit under EMU Stability and Growth Pact

EU and Ireland Public Balance, 1996-2004

Ireland: Central and Local Govt Expenditure as a % of GDP

0.0

10.0

20.0

30.0

40.0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

5

Year

% G

DP

% of GDP

0.020.040.060.080.0

100.0120.0140.0

Luxe

mbo

urg

Ireland

Slov

akia

Czec

h Re

public

Nethe

rland

sAu

stria

Cypr

usDen

mar

kGer

man

yPo

land

Italy

Spain

Greec

eNor

wayIcelan

d

% G

DP

EU Exports of Goods and Services, 2003

Handout

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

per 1,000 population aged 20-29Males Females

Ireland: Science and technology graduates, per 1,000 population aged 20-29, 1995-2004

0

5

10

15

20

25

30

2003200220012000199919981997199619951994

%

EU 15 (% of GDP)EU 25 (% of GDP)Ireland (% of GDP)Ireland (% of GNI)

Ireland & EU spending on Social Protection, 1996-2003

Actual growth rateInflation gap

Unemployment gap

Growth rate of potential GDP

% change GDP

Time

Idea of Fiscal Policy

Stats

Story so far

Ireland & EU

Pre-1973

General Election 1977

Components of the Turnaround & Results

Fiscal Policy

Enter the EU

Stabilisation of debt/GNP ratio

Real wage moderation

Cuts in expenditure

Widening the tax base

Tax amnesty

Components of the Turnaround

Debt/GNP ratio fell to 106% by 1991

Rate of growth of GNP increased

Unemployment fell (14.7%)

Inflation (3.3%)

Results

Fiscal Correction

• SOE is extremely susceptible to external ‘shocks’

• FP tends to have more impact on the BoP then on employment or prices

• Multiplier effect is very weak in a SOE because of a high MPM

Caution....

• Increase in taxation rather than reducing current expenditure

• Loss of confidence in the economy which led to a higher level of interest and a higher EBR and national debt

• Global Economic downturn

Stats

Story so far

Ireland & EU

Enter the EU

External Funding

Euro/EMU/Maastricht criteria

Demographic Trends

Education Profile and Cost of Labour Force

The Footprints of the Celtic Tiger

Growth Rates and Convergence

Inflation

Employment

Unemployment

Female Participation

Migration

Thanks

Ireland in the EUYesterday, Today, Tomorrow

Next Week: Final Lecture!