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Economic Adjustment Within EMU - Ireland’s Experience


  • Conall MacCoille

    (The Economic and Social Research Institute, Dublin)

  • Daniel McCoy

    (The Economic and Social Research Institute, Dublin)


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

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    References listed on IDEAS

    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.
    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. De Broeck, Mark & Slok, Torsten, 2006. "Interpreting real exchange rate movements in transition countries," Journal of International Economics, Elsevier, vol. 68(2), pages 368-383, March.
    5. De Broeck, Mark & Sloek, Torsten, 2001. "Interpreting real exchange rate movements in transition countries," BOFIT Discussion Papers 7/2001, Bank of Finland, Institute for Economies in Transition.
    6. Quinn, Terry & Kenny, Geoff & Meyler, Aidan, 1999. "Inflation Analysis: An Overview," MPRA Paper 11361, University Library of Munich, Germany.
    7. Kenny, Geoff & McGettigan, Donal, 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. Michael Reutter & Hans-Werner Sinn, 2000. "The Minimum Inflation Rate for Euroland," CESifo Working Paper Series 377, CESifo Group Munich.
    10. International Monetary Fund, 1999. "Ireland; Staff Report for the 1999 Article IV Consultation," IMF Staff Country Reports 99/87, International Monetary Fund.
    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).
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    Cited by:

    1. 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.

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