Tag Archives: economics

Call for Papers : COVID-19 and the Real-Financial Economy link : A special issue in International Review of Economics and Finance

COVID19 has thrown a very stark harsh light on the globally interconnected economy.  When this crisis passes there will be an opportunity for reflection on the financial and economic interconnectedness we have grown, its strengths and weaknesses. Economic and Finance academics can and should address this, from a basis of evidence and analysis, hence this call for papers. 
This special issue of International Review of Economics and Finance seeks papers that address this challenge, in particular the following issues, but please also contact us as Editors-in-Chief if you have another paper or idea and wish to check its suitability. Note that papers submitted for this SI will have submission fees waived. Submit here , from 29 March, selecting the article type COVID19:  https://www.editorialmanager.com/iref/default.aspx , before 21/June 2020

We are especially interested in papers that explore

  • Contagion loops between the real and the financial economy in the pandemic
  • Government-bank relationships in the pandemic 
  • The spatial dimensions and financial geography of banking and finance in a pandemic
  • The economic and financial geography of the pandemic 
  • Emergent paradigms in monetary economics, corporate funding and international trade
  • Resilience and strength in global trade and trade financing
  • Financing along the supply chain – strengths and weaknesses and its future
  • Economic and financial lessons from history for the post-pandemic world

Please however feel free to contact us at blucey at tcd dot ie or chen at udayton dot edu should you wish to run an idea past us . Please note: in line with the aims and objectives of the journal all papers should explicitly take an international perspective

Brian Lucey and Carl Chen, Editors in Chief, International Review of Economics and Finance

How badly hurt might Ireland be by a hard Brexit?

Another week, another report on the costs of a hard Brexit. Ireland, unlike the UK, has shown a willingness to engage in open and frank debate on Brexit costs. So, how much will it hurt?

The report from Copenhagen Economics, on Brexit, was the latest in a series – the ESRI, the government, the EU- that have shown the effect that Brexit will have on Ireland. The details differ in each case but the message is the same. Even the softest Brexit will have a negative effect on Ireland. In no way can it be seen as a friendly act.

A sense of perspective is needed, however. There has been some hysterical commentary about Brexit and its impact on Ireland. Some commentators have suggested that it could even be worse than the economic crisis of the mid-noughties. The effects are being presented as Ireland losing billions, being worse off etc.

This is , almost certainly, bunkum.

First, lets see what happened back in the crisis, for perspective. Then lets compare that to the most apocalyptic Brexit scenarios. That is a reasonable benchmark as the unreasonable, unreasoned, unhinged UK government approach is careering them towards a diamond hard Brexit. There remains some hope that the imbroglio that is Northern Ireland can act as a break on that, but that imples an outbreak of common sense and longterm perspective from the DUP, so lets not hold our breath.

Lets revisit the crisis. Lets define its acute phase as 2006-2013. Most of the main aggregate economic indicators peaked in 2006 or 2007 and most had bottomed out by 2011 or so. So how bad? Personal consumption of goods and services fell by 13% ; net spending by government on current goods and services fell by 15%; spending on capital formation (which includes but is not only houses) fell by a staggering 70% ; GDP fell by 16%, GNP by 15% and Gross National income by 20%. These are real, actual, cash losses.

Measuring by GNI the economy was €30b smaller in 2011 than it had been just four years earlier. Jobs were lost also. Employment peaked at 2.237m person in Q4 2007. By Q3 2012 it had bottomed out at 1.875m, nearly 18%, some 361,000 persons less in employment than just a few years before. Half of this fall was attributable to a collapse in construction employment but all sectors were hit. Government revenue also took a battering, even with the widening of tax bands and bases. Exchequer receipts fell 40% or more from a high of 16.5b in Q4 2007 to 9.7b in Q4 2009.

This was a real, hard, battering across the economy. The collapse of the economy in 2007-9 was stupendous. And it was real.

By contrast, the studies on the likely effect of even a diamond hard Brexit are cheerful reading. No study suggests a contraction of the economy. Instead what is forecast is that the economy will not be as large in the presence of Brexit than it would otherwise have been. A figure for this loss of potential output in the order of 7-9% is the norm across studies. This is also over a 10-15y horizon. even a diamond hard Brexit are cheerful reading. No study suggests a contraction of the economy. Instead what is forecast is that the economy will not be as large in the presence of Brexit than it would otherwise have been. A figure for this loss of potential output in the order of 7-9% is the norm across studies. This is also over a 10-15y horizon.

A figure for this loss of potential output in the order of 7-9% is the norm across studies. This is also over a 10-15y horizon. Let’s not even compare that to loss of actual output of 20% across a four year period.

A further wrinkle is on the sectoral impact. As the construction industry collapsed, taking with it the tax revenues it had generated, this rippled through the economy a a whole. Here , even in a hardest Brexit, the pain is spread, albeit not across all sectors. Five sectors – agrifood, pharma, electrical machinery, wholesale and retail and air transport-will account for over 90% of the effect of Brexit on the economy. The two biggest hit are agrifood and pharma with Pharma being in fact the hardest hit. A key distinction here is that Pharma is a much less labour intensive industry than agrifood. Thus the labour market impact of Brexit will be in effect concentrated in one sector –the agrifood sector.wholesale and retail and air transport-will account for over 90% of the effect of Brexit on the economy. The two biggest hit are agrifood and pharma with Pharma being in fact the hardest hit. A key distinction here is that Pharma is a much less labour intensive industry than agrifood. Thus the labour market impact of Brexit will be in effect concentrated in one sector –the agrifood sector. even here we are talking about slower growth over a long time than actual contraction over a short time. Must of this comes from reduced UK exports and most of that from non trade barriers in an hard Brexit. Anything which sees the UK remain close to a Norway or Swiss style deal reduces the effects to margin of forecast error levels.

Paradoxically this makes managing it harder in some ways. When the whole country is going to hell in a handbasket the state can make the broad changes needed. When it is only one sector that sector will need to be extremely vocal and also extremely nimble. Although the agrifood sector has been reducing its dependence on the uk over the years the reality is that this has not taken place at the same pace as the economy overall. Brexit represents a shock to the core of the irish agrifood system but as it is happening it needs to be taken as an opportunity. There are good government plans in place, in contrast to the UK continued reliance on hope and hype, but these can only go so far. At the end, the participants in the sector need to drive their products to other, more lucrative but more difficult markets.Brexit represents a shock to the core of the irish agrifood system but as it is happening it needs to be taken as an opportunity. There are good government plans in place, in contrast to the UK continued reliance on hope and hype, but these can only go so far. At the end, the participants in the sector need to drive their products to other, more lucrative but more difficult markets.

Brexit will hurt. It is pointless, and heedless. But it seems that the UK is intent on it. We are blessed with a functioning, competent political and governance system that will mitigate as much as possible the effects of this homegrown act of sociopolitical pique by our neighbors. The economywide effects will be slower growth not actual contraction. Placed in that context the notion that we would consider exiting the EU alongside the UK becomes even more delusional.

This is a longer version of an Irish Examiner column 19/02/18

Broadband Panaceas

 

The recent release of new economic growth measures has prompted once again again a debate on regional, from which we can generally read urban versus rural, development in Ireland. To listen to some commentators you would imagine that beyond the M50 ring-road or beyond Blarney there is an economic wasteland, with those few people remaining in their 90s and an infrastructure barely out of the 18th-century.

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Pipers, Tunes and Payment in the Higher Education Sector

Recent discussion on university funding has been on the basis of the Public Accounts Committee report.  This, along with the RTE Prime-time  Investigates program, has led to a perception of a state funded sector out of financial control.  Both of these are wrong.

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If you build them, they will come

Ireland has an opportunity to position itself as a leader in an emerging technology, or perhaps a reemerging one. All it takes is political vision, a willingness to face down some entrenched local vested interests and a desire to make a change. This of course means it wont happen, but we can dream!

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Dark forces and Brexit.

With each day that passes and the ramifications of Brexit  become evermore entwined.  leaving aside the damage that is being done to the UK’s economic and political reputation, we now see the stirrings, deliberate and calculated, of a pot of debate on a putative Irexit, an Irish exit from the European union. Like it or not this debate will continue, and to ignore it is neither politic nor possible. That it is ridiculous and risible is obvious to even a casual analysis, but we have seen with Trump and Brexit that mere foolishness does not deter a polity from a course of action.

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