Friday, August 21, 2015

Putting the Budget on a Sound Footing: The Experience of the Irish Fiscal Adjustment

FATAS Antonio
Putting the Budget on a Sound Footing: The Experience of the Irish Fiscal Adjustment in  Ireland, Lessons from its Recovery from the Bank-Sovereign Loop, IMF Special Report, IMF (2015) 71-109

This paper analyzes fiscal policy developments in Ireland during the past six years. Despite the large fiscal progress during the 1985–2007 period, the large increa se in government debt after 2008 led to a full-blown sovereign debt crisis and the need for a large fi scal consolidation. The adjustment that followed, while necessary, led to a debate between those who argued that it was too fast and others who believed that it was not aggressive enough. This paper presents the arguments as well as empirical evidence to assess the costs and benefits of different speeds of fiscal consolidation. We conc lude with some insights on the fiscal path ahead.