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The real exchange rate, fiscal policy and the current account : interpreting recent Irish experience

Author

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  • Brendan M. Walsh

Abstract

This paper examines the Irish macroeconomic adjustment over the period since 1979 with particular reference to the interaction of the real exchange rate with the balance between national saving and investment. The transition from a large current account deficit to an exceptional surplus and the reversal of the growth in external indebtedness are discussed. The fact that a major reduction in absorption was achieved without a real exchange rate depreciation is attributed to a simultaneous reduction in investment spending relative to GDP and an improvement in the relative efficiency of the industrial exporting sectors. These factors are likely to continue to exert upward pressure on the Irish real exchange rate.

Suggested Citation

  • Brendan M. Walsh, 1996. "The real exchange rate, fiscal policy and the current account : interpreting recent Irish experience," Working Papers 199610, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:199610
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    Download full text from publisher

    File URL: http://hdl.handle.net/10197/2984
    File Function: First version, 1996
    Download Restriction: no
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    Citations

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    Cited by:

    1. Stilianos Fountas & Donal Bredin, 1998. "Exchange rate volatility and exports: the case of Ireland," Applied Economics Letters, Taylor & Francis Journals, vol. 5(5), pages 301-304.

    More about this item

    Keywords

    Fiscal policy; Current account; Real exchange rates; Ireland--Economic policy; Balance of payments--Ireland; Fiscal policy--Ireland; Foreign exchange rates--Ireland;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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