Going to have to go back to the advocacy times for a European Union. Were the potential disadvantages emphasized as well?

From “Ireland writing a new economic textbook”, by G. Pascal Zachary. The Wall Street Journal, via the Globe and Mail, May 24, 2000:

Ireland, once an economic laggard that exported people to all corners of the world, is Europe’s economic star today. Growth is expected to top 8 per cent this year, the fifth year in a row it has reached lofty levels. Employment is up. Living standards are rising.

But worrisome signs are showing. The inflation rate is at the highest level in more than 10 years–5 per cent. Over the past 12 months, credit expanded by an astonishing 27 per cent. Home prices rose by nearly as much. Wage gains are accelerating.

The textbook response to such economic conditions–a prompt increase in interest rates–isn’t available. Ireland gave up that power when it surrendered its currency for the euro in January 1999, the currency shared by 11 European nations.

The euro has brought lower interest rates and a depreciating currency–the exact opposite of what an orthodox economist would prescribe for Ireland, if it still controlled its own monetary policy…

“If you open an economic textbook, you’ll see you’re heading for trouble,” says Maurice O’Connell, governor of the Central Bank of Ireland, who used to set Irish interest rates, but now is one of 17 voices at the European Central Bank

And later…

And now…


About brucelarochelle
This entry was posted in Economics, European Central Bank, European Union, Ireland. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s