Drs Aedin Doris, Kevin Denny and I wrote a response to the consultation paper on the review of leaving cert economics for the IEA. The consultation paper is here (.pdf). The response is here (.pdf).
Welcome back to UL for the autumn semester! If you're studying EC4004, Economics for Business, the module outline, notes, and assessment details are on the module page here, and mirrored on SULIS if you like using that service.
If you're studying EC6021, Macroeconomic theory, the module page is here. Again, there's a SULIS mirror for this page.
If you're studying Mathematics for Economists, the module page is here.
I see headlines talking about ‘market turmoil’, that China’s heading for a meltdown and apparently I should care about the Kazakhstani Tenge’s devaluation or something. What’s going on? Like, should I be stocking up on canned goods and shotgun shells?
No. You should calm down. Turmoil is a state of unrest, ambiguity and uncertainty, but it is not the end of the world because a few rich people get worried about the returns on their portfolios. Buy canned goods and shotgun shells another time.
Using the Eurosystem Household Finance and Consumption (HFCS) data, this paper identifies the key differences in borrowing behaviour between core and peripheral nations. As such, we focus on non-collateralized debt such as credit card loans, bank overdrafts and other forms of non-collateralized debt, which reflect daily borrowing behaviour more closely than does mortgage debt. We examine the differences in levels and prevalence of these debts, and break down these differences into two major components: financial perceptions and the economic environment. We aim to explain to what extent these influences contribute to the differences in debt ownership and levels of holding between core and peripheral countries in Europe. We found that differences in financial perceptions do contribute to the differences in debt in a significant way, while the economic environment contributes little to this outcome. Households in the European periphery are much more conducive to debt if they have the same financial perceptions as those in the core countries in Europe.
Download our new working paper here.
Sir, I read with interest Prof. Hans-Werner Sinn’s assertion (“Why Greece Should Leave theEurozone”, July 24, 2015) that Ireland’s austerity effectively ended in 2010. As an Irish citizen and an economist I can tell you it didn’t. Dr. Sinn says the bubble burst in 2006, it was 2007. Dr. Sinn says no fiscal rescue was available—there was, but it wasn’t enough. Irish debt relative to GDP went from about 35% in 2006 to about 124% in 2013. Dr. Sinn says Irish wages fell drastically. Not so. According to Ireland’s Earnings, Hours and Employment Costs Survey, private sector wages fell by about 4% while public sector wages fell by about 3% over the crissis. Not nothing, but hardly a drop justifying the term ‘drastic’. What actually happened was employers reduced their wage bills by reducing employment and average hours worked per employee. This is important because what is really going on in the Irish economy is a Keynesian adjustment in quantity of labour and not a neoclassical wage-rate adjustment, implying the ‘cure’ for Ireland’s problems was not so much a supply-side set of ‘reforms’ but a (an?) increase in demand, first from the rest of the world thanks to Ireland’s remarkable openness as an economy, and then from a demand response following the end of austerity in 2013--not 2010. The Greek economy is nowhere near as open as the Irish economy, and, as measured by the cyclically adjusted structural balance, has already endured more than double the amount of austerity than Ireland. The Irish story isn’t a price adjustment, it’s a quantity adjustment. Dr. Sinn gets the most important part of his diagnosis wrong. His prescription is likely to kill the Greek patient. I’m not calling him a quack but if it walks like a duck, etc.
Published in the NYT on the 11th of August.