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Irish inflation : appropriate policy responses

Author

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  • Rodney Thom
  • Kevin H. O'Rourke

Abstract

This article argues that the cost increasing, supply side approach cannot adequately explain the current Irish inflation. It suggests that the correct model is one that is based on excess demand fuelled by continuing economic growth and demand-side shocks, including nominal exchange rate depreciation and lax budgetary policy. Evidence is presented to suggest that inflationary pressures have been building up in the economy for longer than is generally appreciated. As for appropriate policy responses, these include nominal wage increases above those agreed under the PPF but exclude tax cuts which, at the time of writing, seem likely to emerge in the December 2000 Budget.

Suggested Citation

  • Rodney Thom & Kevin H. O'Rourke, 2000. "Irish inflation : appropriate policy responses," Open Access publications 10197/706, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:oapubs:10197/706
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    File URL: http://hdl.handle.net/10197/706
    File Function: Open Access version, 2000
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    References listed on IDEAS

    as
    1. Ralph Turvey, 2000. "Owner-occupiers and the Price Index," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 1(3), pages 153-159, July.
    2. Crafts,Nicholas & Toniolo,Gianni (ed.), 1996. "Economic Growth in Europe since 1945," Cambridge Books, Cambridge University Press, number 9780521499644.
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    Cited by:

    1. Kamps, Christophe & Scheide, Joachim, 2001. "End of the upswing in Euroland: No reason to cut interest rates," Kiel Discussion Papers 374, Kiel Institute for the World Economy (IfW Kiel).
    2. 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.

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