The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Irish Crisis: Origins and Resolution

  • John FitzGerald
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_3024

Abstract

The Celtic Tiger years in the 1990s saw the standard of living in Ireland converge rapidly to the EU15 average. However, in the middle 2000s the rapid growth continued and demand rose well above potential output, driven by a property market bubble. Either appropriate fiscal policy or appropriate financial regulation could have prevented the ensuing crisis.

The management of the crisis after 2008 and the economic turnaround, which began in 2012, was reasonably successful. There was initially a period of very severe fiscal tightening, which brought the crisis in the public finances under control. Also, pre-emptive action by the government in building up liquid assets in 2008 and 2009 facilitated management of the crisis, though it did not obviate the need for extensive liquidity support through a bail-out programme.

While the tradable sector of the economy suffered from the boom and bust cycle it still survived reasonably intact. As a result, once the fiscal adjustment was completed, and with a return to world growth, the economy bounced back. The rapid recovery has been facilitated by the low interest rate environment and the fall in oil prices. While some of the lost ground as a result of the crisis will be made up, undoubtedly there will be a permanent loss of output as a result of the very severe crisis.

Keywords

Financial crisis Financial regulation Fiscal adjustment Ireland 

JEL Classifications

E32 E60 E62 E65 
This is a preview of subscription content, log in to check access.

Bibliography

  1. Barrett, A., and A. Bergin. 2009. Estimating the impact of immigration in Ireland. Nordic Journal of Political Economy 35: 1–15.Google Scholar
  2. Barrett, A., J. FitzGerald, and B. Nolan. 2002. Earnings inequality, returns to education and immigration into Ireland. Labour Economics 9(5): 665–680.CrossRefGoogle Scholar
  3. Barrett, A., I. Kearney, and Y. McCarthy. 2007. Quarterly economic commentary. Dublin: Economic and Social Research Institute.Google Scholar
  4. Barry, F. 2002. The Celtic Tiger era: Delayed convergence or regional boom? Quarterly Economic Commentary. Dublin: Economic and Social Research Institute.Google Scholar
  5. Bergin, A., J. FitzGerald, I. Kearney, and C. O’Sullivan. 2011. The Irish fiscal crisis. National Institute Economic Review 217: R47–R59.CrossRefGoogle Scholar
  6. Byrne, D., D. Duffy, and J. FitzGerald. 2014. Household formation and tenure choice: Did the great Irish housing bust alter consumer behaviour? ESRI working paper 487.Google Scholar
  7. Cardiff, K. 2016. RECAP: Inside Ireland’s financial crisis. Dublin: Liffey Press.Google Scholar
  8. Conefrey, T., and J. FitzGerald. 2010. Managing housing bubbles in regional economies under EMU: Ireland and Spain. National Institute Economic Review 211(1): 211–299.CrossRefGoogle Scholar
  9. Crafts, N. 2014. Ireland’s medium-term growth prospects: A phoenix rising? Economic and Social Review 45(1): 87–112.Google Scholar
  10. Euroframe. 2013. Economic assessment of the euro area. Winter report. www.euroframe.orgGoogle Scholar
  11. FitzGerald, J. 2013a. The impact of fiscal policy on the economy. Quarterly Economic Commentary. Research notes 2013/3/1.Google Scholar
  12. FitzGerald, J. 2013b. Financial crisis, economic adjustment and a return to growth in the EU. Revue de l’OFCE – Debates and Policies 127: 277–302.Google Scholar
  13. FitzGerald, J. 2015. Problems interpreting the national accounts in a globalised economy – Ireland. Special Article. Quarterly Economic Commentary. Dublin: Economic and Social Research Institute.Google Scholar
  14. FitzGerald, J., and E. Morgenroth. 2006. Ex ante evaluation of the investment priorities for the national development plan 20072013. Policy research series no. 59. Dublin: Economic and Social Research Institute.Google Scholar
  15. FitzGerald, J., A. Bergin, Í. Kearney, A. Barrett, D. Duffy, S. Garrett, and Y. McCarthy. 2005. Medium-term review: 2005–2012. Dublin: Economic and Social Research Institute.Google Scholar
  16. HM Treasury. 2003. Fiscal stabilisation and EMU. London: HM Treasury.Google Scholar
  17. Honohan, P. 2009. Resolving Ireland’s banking crisis. Economic and Social Review 40(2): 207–231.Google Scholar
  18. Honohan, P. 2010. The Irish banking crisis: Regulatory and financial stability policy 20032008. Report to the Minister for Finance by the Governor of the Central Bank.Google Scholar
  19. Kelly, M. 2007. On the likely extent of falls in Irish house prices. Quarterly Economic Commentary. Dublin: Economic and Social Research Institute.Google Scholar
  20. Lane, P.R. 2015a. The funding of the Irish domestic banking system during the boom. Journal of the Statistical and Social Inquiry Statistical Society of Ireland 44: 40–70.Google Scholar
  21. Lane, P. R. 2015b. Macro-financial stability under EMU. Trinity economic paper no. 06/15.Google Scholar
  22. O’Gráda, C. 2002. Is the Celtic Tiger a paper tiger? Quarterly Economic Commentary. Dublin: Economic and Social Research Institute.Google Scholar
  23. Oireachtas. 2016. Report of the banking inquiry.https://inquiries.oireachtas.ie/banking/
  24. Whelan, K. 2014. Ireland’s economic crisis: The good, the bad and the ugly. Journal of Macroeconomics 39(B): 424–440.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John FitzGerald
    • 1
  1. 1.