IDEAS home Printed from https://ideas.repec.org/a/eso/journl/v33y2002i2p179-193.html
   My bibliography  Save this article

Economic Adjustment Within EMU - Ireland’s Experience

Author

Listed:
  • Conall MacCoille

    (The Economic and Social Research Institute, Dublin)

  • Daniel McCoy

    (The Economic and Social Research Institute, Dublin)

Abstract

This paper examines the contribution of Balassa-Samuelson (B-S) type effects to inflationary pressures in Ireland. Irish productivity measures are exaggerated by foreign multinationals engaged in high value-added activities. These measures suggest that high productivity in the traded sectors explain most of the inflation differential. Using adjusted measures to account for the multinational effect, shorter-term demand side factors become more significant in explaining the inflation differential. Domestic fiscal and incomes policies are therefore an important source of adjustment for the Irish economy within a monetary union.

Suggested Citation

  • Conall MacCoille & Daniel McCoy, 2002. "Economic Adjustment Within EMU - Ireland’s Experience," The Economic and Social Review, Economic and Social Studies, vol. 33(2), pages 179-193.
    • Handle: RePEc:eso:journl:v:33:y:2002:i:2:p:179-193
    as

    Download full text from publisher

    File URL: http://www.esr.ie/Vol33_2McCoille.pdf
    File Function: First version, 2002
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Baker, Terence J. & FitzGerald, John & Honohan, Patrick, 1996. "Economic Implications for Ireland of EMU," Research Series, Economic and Social Research Institute (ESRI), number PRS28, June.
    2. Gerard Caprio & Patrick Honohan, 2008. "Banking Crises," Center for Development Economics 2008-09, Department of Economics, Williams College.
    3. John Fitz Gerald, 2001. "Managing an Economy Under EMU: The Case of Ireland," The World Economy, Wiley Blackwell, vol. 24(10), pages 1353-1371, November.
    4. repec:zbw:bofitp:2001_007 is not listed on IDEAS
    5. Quinn, Terry & Kenny, Geoff & Meyler, Aidan, 1999. "Inflation Analysis: An Overview," MPRA Paper 11361, University Library of Munich, Germany.
    6. International Monetary Fund, 2001. "Interpreting Real Exchange Rate Movements in Transition Countries," IMF Working Papers 2001/056, International Monetary Fund.
    7. Geoff Kenny & Donal McGettigan, 1999. "Modelling Traded, Non‐traded and Aggregate Inflation in a Small Open Economy: The Case of Ireland," Manchester School, University of Manchester, vol. 67(1), pages 60-88, January.
    8. Rodney Thom & Kevin H. O'Rourke, 2000. "Irish inflation : appropriate policy responses," Open Access publications 10197/706, School of Economics, University College Dublin.
    9. International Monetary Fund, 1999. "Ireland: Staff Report for the 1999 Article IV Consultation," IMF Staff Country Reports 1999/087, International Monetary Fund.
    10. Michael Reutter & Hans-Werner Sinn, 2000. "The Minimum Inflation Rate for Euroland," CESifo Working Paper Series 377, CESifo.
    11. John FitzGerald & Ide Kearney, 2000. "Convergence in Living Standards in Ireland: The Role of the New Economy," Papers WP134, Economic and Social Research Institute (ESRI).
    12. Philip Lane, 1998. "Profits and Wages in Ireland, 1987-1996," Economics Technical Papers 9814, Trinity College Dublin, Department of Economics.
    13. David Duffy & John FitzGerald & Diarmaid Smyth, 2000. "Ireland's Exposure To a Sterling Shock," Papers WP135, Economic and Social Research Institute (ESRI).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karl Whelan, 2019. "The Euro at 20: Successes, Problems, Progress and Threats," The Economic and Social Review, Economic and Social Studies, vol. 50(4), pages 725-750.
    2. Dermot Hodson, 2003. "The Exchange Rate as an Adjustment Mechanism - A Structural VAR Approach to the Case of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 34(2), pages 151-172.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick Honohan & Anthony J. Leddin, 2006. "Ireland in EMU - More Shocks, Less Insulation?," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 263-294.
    2. Balázs Égert, 2005. "Balassa-Samuelson Meets South Eastern Europe, the CIS and Turkey: A Close Encounter of the Third Kind?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 221-243, December.
    3. Balázs Égert & László Halpern & Ronald MacDonald, 2006. "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 257-324, April.
    4. García Solanes José, 2008. "Real Exchange Rate Appreciation in Central and Eastern European Countries. Why the Balassa-Samuelson Effect Does Not Explain the Whole Story," Working Papers 2010100, Fundacion BBVA / BBVA Foundation.
    5. Patrick Honohan & Philip R. Lane, 2003. "Divergent inflation rates in EMU [‘European financial integration and equity returns: a theory-based assessment’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(37), pages 357-394.
    6. José García Solanes & Fernando Torrejón Flores, "undated". "Testing the BalassA-Samuelson hypothesis in two different groups of countries: OECD and Latin America," Working Papers on International Economics and Finance 05-02, FEDEA.
    7. Sánchez, Marcelo, 2006. "Implications of monetary union for catching-up member states," Working Paper Series 630, European Central Bank.
    8. Sanchez, Marcelo, 2007. "Monetary stabilisation in a currency union: The role of catching up member states," Journal of Policy Modeling, Elsevier, vol. 29(1), pages 29-40.
    9. Heather Gibson & Jim Malley, 2008. "The Contribution of Sectoral Productivity Differentials to Inflation in Greece," Open Economies Review, Springer, vol. 19(5), pages 629-650, November.
    10. Helge Berger & Jakob de Haan & Robert Inklaar & Jakob de Haan, 2003. "Restructuring the ECB," CESifo Working Paper Series 1084, CESifo.
    11. repec:onb:oenbwp:y::i:61:b:1 is not listed on IDEAS
    12. Egert, Balazs, 2002. "Estimating the impact of the Balassa-Samuelson effect on inflation and the real exchange rate during the transition," Economic Systems, Elsevier, vol. 26(1), pages 1-16, April.
    13. Servaas Deroose & Sven Langedijk & Werner Roeger, 2004. "Reviewing adjustment dynamics in EMU: from overheating to overcooling," European Economy - Economic Papers 2008 - 2015 198, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    14. Eleanor Doyle, 2004. "Exchange rate pass-through in a small open economy: the Anglo-Irish case," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 443-455.
    15. Balázs Égert, 2005. "The Balassa‐Samuelson Hypothesis in Estonia: Oil Shale, Tradable Goods, Regulated Prices and Other Culprits," The World Economy, Wiley Blackwell, vol. 28(2), pages 259-286, February.
    16. Peter Backé & Jarko Fidrmuc & Thomas Reininger & Franz Schardax, 2002. "Price Dynamics in Central and Eastern European EU Accession," Working Papers 61, Oesterreichische Nationalbank (Austrian Central Bank).
    17. Alan Barrett & Adele Bergin & David Duffy, 2006. "The Labour Market Characteristics and Labour Market Impacts of Immigrants in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 37(1), pages 1-26.
    18. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide & Znuderl, Nusa, 2013. "The HERMES-13 macroeconomic model of the Irish economy," Papers WP460, Economic and Social Research Institute (ESRI).
    19. Mr. Juan Zalduendo, 2008. "Bivariate Assessments of Real Exchange Rates Using PPP Data," IMF Working Papers 2008/153, International Monetary Fund.
    20. Gerard Caprio & Patrick Honohan, 2008. "Banking Crises," Center for Development Economics 2008-09, Department of Economics, Williams College.
    21. Kirsten Lommatzsch & Silke Tober, 2004. "The Inflation Target of the ECB: Does the Balassa-Samuelson Effect Matter?," EUI-RSCAS Working Papers 19, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eso:journl:v:33:y:2002:i:2:p:179-193. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aedin Doris (email available below). General contact details of provider: https://www.esr.ie .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.