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The impact of government spending on Ireland’s housing and residential market – Targeted vs economy-wide stimulus

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  • Egan, Paul
  • Bergin, Adele

Abstract

The Irish residential property market is currently characterized by a considerable structural deficiency in housing supply compared to the underlying level of demand. The lack of housing has led to several economic and social problems in Ireland. The imbalance between supply and demand has led to both house prices and rents increasing faster than household incomes. Recent policy initiatives by the Irish Government have outlined plans for significant spending aimed at increasing the numbers of housing completions to tackle these issues. This paper examines the impact of government spending on housing supply using a structural econometric model of the Irish economy with a specific construction block. Within our econometric analysis, we compare the results of an economy wide versus a sector specific government stimulus on the property market. Our simulations suggest that, in order to achieve social and economic goals like increasing the number of dwellings and making housing more affordable by containing house price inflation, a targeted policy such as that described in the Irish Government's Housing for All plan may be preferable to an economy-wide stimulus.

Suggested Citation

  • Egan, Paul & Bergin, Adele, 2023. "The impact of government spending on Ireland’s housing and residential market – Targeted vs economy-wide stimulus," Journal of Policy Modeling, Elsevier, vol. 45(3), pages 552-569.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:3:p:552-569
    DOI: 10.1016/j.jpolmod.2023.05.005
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    More about this item

    Keywords

    Housing Supply; Housing Policy; Government Spending; Construction Sector; Irish Economy;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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