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International Financial Flows and the Irish Crisis

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  • Philip R. Lane

    (Trinity College Dublin)

Abstract

This paper explores the contribution of international financial flows to the boom-bust-recovery cycle in Ireland. It finds that a nuanced interpretation is required, in that bank-intermediated debt inflows certainly contributed to the amplification of the property boom during 2003-2007 but that other types of international flows have played a stabilising role through a variety of mechanisms, with a new wave of inflows a key component of the current recovery phase.

Suggested Citation

  • Philip R. Lane, 2014. "International Financial Flows and the Irish Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp444, IIIS.
    • Handle: RePEc:iis:dispap:iiisdp444
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    References listed on IDEAS

    as
    1. Philip Lane, 2011. "The Irish Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp356, IIIS.
    2. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
    3. Kelly, Morgan, 2010. "Whatever Happened to Ireland?," CEPR Discussion Papers 7811, C.E.P.R. Discussion Papers.
    4. Beblavý,Miroslav & Cobham,David & Ódor,L'udovít (ed.), 2011. "The Euro Area and the Financial Crisis," Cambridge Books, Cambridge University Press, number 9781107014749.
    5. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2012. "External adjustment and the global crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 252-265.
    6. FitzGerald, John, 2013. "The Effect of Re-domiciled Plcs on Irish Output Measures and the Balance of Payments," Research Notes RN2013/1/2, Economic and Social Research Institute (ESRI).
    7. Philip R. Lane, 2013. "Capital Flows in the Euro Area," European Economy - Economic Papers 2008 - 2015 497, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Philip R. Lane & Gian Maria Milesi-Ferretti, 2009. "Where Did All the Borrowing Go? A Forensic Analysis of the U.S. External Position," NBER Chapters, in: Financial Globalization, 20th Anniversary Conference, NBER-TCER-CEPR, National Bureau of Economic Research, Inc.
    9. Whelan, Karl, 2014. "Ireland’s Economic Crisis: The Good, the Bad and the Ugly," Journal of Macroeconomics, Elsevier, vol. 39(PB), pages 424-440.
    10. Raphael A. Auer, 2014. "What drives TARGET2 balances? Evidence from a panel analysis [What drives Target2 balances? Evidence from a panel analysis]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(77), pages 139-197.
    11. Daniel Gros & Cinzia Alcidi, 2015. "Country adjustment to a ‘sudden stop’: does the euro make a difference?," International Economics and Economic Policy, Springer, vol. 12(1), pages 5-20, March.
    12. Honohan, Patrick, 2006. "To What Extent has Finance been a Driver of Ireland's Economic Success?," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2006(4-Winter), pages 59-72.
    13. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    14. Gabriel Fagan & Paul McNelis, 2014. "TARGET Balances and Macroeconomic Adjustment to Sudden Stops in the Euro Area," The Institute for International Integration Studies Discussion Paper Series iiisdp465, IIIS, revised Dec 2014.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sergio Cesaratto, 2014. "Balance of payments or monetary sovereignty? In search of the EMU’s original sin – a reply to Lavoie," a/ Working Papers Series 1406, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    2. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
    3. Raza, Hamid & Zoega, Gylfi & Kinsella, Stephen, 2018. "Capital inflows, crisis and recovery in small open economies," Finance Research Letters, Elsevier, vol. 27(C), pages 273-282.
    4. Fischer, Andreas M. & Groeger, Henrike & Sauré, Philip & Yeşin, Pınar, 2019. "Current account adjustment and retained earnings," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 246-259.
    5. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Post-Print hal-02381560, HAL.
    6. repec:hal:spmain:info:hdl:2441/1divsbu8t888r9vqektjbmlqoa is not listed on IDEAS
    7. Hamid Raza & Bjorn Gudmundsson & Stephen Kinsella & Gylfi Zoega, 2015. "Experiencing financialisation in small open economies: An empirical investigation of Ireland and Iceland," Working papers wpaper84, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    8. Hana Hejlova & Michal Hlavacek & Blanka Vackova, 2020. "Estimating Commercial Property Price Misalignment in the CEE Countries," Working Papers 2020/11, Czech National Bank.
    9. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
    10. Gylfi Zoega, 2019. "Greece and the Western Financial Crisis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(2), pages 113-126, June.
    11. Clancy, Daragh & Merola, Rossana, 2014. "The effect of macroprudential policy on endogenous credit cycles," Research Technical Papers 15/RT/14, Central Bank of Ireland.
    12. Michael O’Grady, 2019. "Estimating the Output, Inflation and Unemployment Gaps in Ireland using Bayesian Model Averaging," The Economic and Social Review, Economic and Social Studies, vol. 50(1), pages 35-76.
    13. Clancy, Daragh & Merola, Rossana, 2017. "Countercyclical capital rules for small open economies," Journal of Macroeconomics, Elsevier, vol. 54(PB), pages 332-351.
    14. Mary Cussen, 2015. "Deciphering Ireland’s Macroeconomic Imbalance Indicators: Statistical Considerations," The Economic and Social Review, Economic and Social Studies, vol. 46(2), pages 293-313.
    15. repec:hal:spmain:info:hdl:2441/2i9jel1usb85nr2j7tejsaldfu is not listed on IDEAS

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    More about this item

    Keywords

    international capital flows; euro crisis; Irish crisis;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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