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Irish inflation: appropriate policy responses

Rodney Thom and Kevin O'Rourke ()

Open Access publications from School of Economics, University College Dublin

Abstract: This article argues that the cost increasing, supply side approach cannot adequately explain the current Irish inflation. It suggests that the correct model is one that is based on excess demand fuelled by continuing economic growth and demand-side shocks, including nominal exchange rate depreciation and lax budgetary policy. Evidence is presented to suggest that inflationary pressures have been building up in the economy for longer than is generally appreciated. As for appropriate policy responses, these include nominal wage increases above those agreed under the PPF but exclude tax cuts which, at the time of writing, seem likely to emerge in the December 2000 Budget.

Keywords: Inflation (Finance)--Ireland; Ireland--Economic policy (search for similar items in EconPapers)
Date: 2000
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Published in: Irish Banking Review, (Winter 2000) 2000

Downloads: (external link) Open Access version, 2000 (application/pdf)

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