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Adjustment and external shocks in Ireland

Author

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  • McAleese, Dermot
  • McCarthy, F. Desmond

Abstract

The purpose of this paper is to study the impact of external shocks on an economy which was well along the path of transition to outward looking policies. The shocks in question were a deterioration in the terms of trade, slowdown in the world economy during the period 1978-82, and an increase in interest rates. A priori the fact of outward orientation would suggest that the Irish economy should have been able to respond effectively to these shocks. By quantifying both the impact of the external shocks and of the policy response, aspects which have been neglected in the literature on Ireland's experience, a more complete understanding of the unsatisfactory performance of the economy during the 1980s can be obtained. The paper is divided as follows: first the policy background since 1960 is outlined. Secondly, the effects of external shocks are quantified. The third section contains a discussion of policy response to these shocks. The concluding section discusses the recent policy performance and initiatives.

Suggested Citation

  • McAleese, Dermot & McCarthy, F. Desmond, 1989. "Adjustment and external shocks in Ireland," Policy Research Working Paper Series 262, The World Bank.
    • Handle: RePEc:wbk:wbrwps:262
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    References listed on IDEAS

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    1. Bradley, John & Fitzgerald, John, 1988. "Industrial output and factor input determination in an econometric model of a small open economy," European Economic Review, Elsevier, vol. 32(6), pages 1227-1241, July.
    2. Rudiger Dornbusch, 1988. "Credibility, Debt and Unemployment: Ireland's Failed Stabilization," NBER Working Papers 2785, National Bureau of Economic Research, Inc.
    3. FitzGerald, John, 1986. "The National Debt and Economic Policy in the Medium Term," Research Series, Economic and Social Research Institute (ESRI), number PRS07.
    4. McAleese, D., 1971. "Effective Tariffs and the Structure of Industrial Protection in Ireland," Research Series, Economic and Social Research Institute (ESRI), number GRS62.
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    Cited by:

    1. McCarthy, F. Desmond & Dhareshwar, Ashok, 1992. "Economic shocks and the global environment," Policy Research Working Paper Series 870, The World Bank.
    2. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 75-122, National Bureau of Economic Research, Inc.
    3. Eddie Casey & Joe Durkan & David Duffy, 2013. "Fiscal Consolidation Strategies: Evidence from the International Experience," Open Access publications 10197/5999, School of Economics, University College Dublin.
    4. McCarthy, F. Desmond & Pant, Chandrashekar & Kangbin Zheng & Zanalda, Giovanni, 1994. "External shocks and performance responses during systemic transition : the case of Ukraine," Policy Research Working Paper Series 1361, The World Bank.
    5. de Abreu Pereira Uhr, Daniel & de Oliveira Pinheiro, Magnus Kelly & Francisco, Domingos Joaquim & de Oliveira, Mauricio Felipe Bemfica & Uhr, Júlia Gallego Ziero, 2023. "The effect of 1987 Ireland’s Programme for National Recovery on sustainable economic growth: A synthetic control approach," Economics Letters, Elsevier, vol. 222(C).
    6. Daragh Clancy, 2019. "US corporate tax rate cuts: Spillovers to the Irish economy," Working Papers 38, European Stability Mechanism.

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