Ireland and the Macroeconomic Imbalance Procedure

Ronan Hickey and Linda Kane
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Ronan Hickey: Central Bank of Ireland
Linda Kane: Central Bank of Ireland

Quarterly Bulletin Articles, 2014, 70-81

Abstract: The Macroeconomic Imbalance Procedure (MIP), introduced in late 2011, is one of the key components of the reformed European economic governance framework. With its goal of ensuring that macroeconomic imbalances do not emerge as they did in the 2000s, the MIP is part of a strengthened EU economic surveillance framework and is designed to complement the revised Stability and Growth Pact. While it is not clear to what extent the presence of an MIP in the last decade would have reduced Irish imbalances before the financial crisis, it would, at the very least, have placed more of a spotlight on credit and competitiveness developments. With Ireland exiting its Economic Adjustment Programme in December 2013 it is now subject to the MIP. There has been a reduction in the scale of Irish imbalances since the recession; internal imbalances are improving but some will take time to unwind from their current high levels, while external imbalances are currently less of a concern.

Date: 2014-07
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