European Economic Crisis: Ireland in Comparative Perspective

41 Pages Posted: 23 Aug 2010 Last revised: 30 Oct 2010

Niamh Hardiman

University College Dublin (UCD)

Sebastian Dellepiane

University College Dublin - School of Politics and International Relations

Date Written: 2010

Abstract

The current economic crisis has hit all European countries hard, but some are much more severely affected others. The problems manifest in European peripheral countries, especially Ireland, Spain, and Greece, have roots in domestic policy mistakes. However, the European context of these policy profiles also needs to be taken into account. The creation of the Euro initially yielded large credibility gains for the weaker economies, extending low interest rates across the Eurozone. But it also introduced a set of perverse incentives toward fiscal expansion which were supposed to be managed at domestic level. Weak European coordinating capacity meant there were few effective external disciplines on national decision-making. The sanctions built into the Stability and Growth Pact proved more controversial and therefore less constraining than originally envisaged. The problems accumulating in the weaker economies made them particularly exposed to crisis when the downturn came. The crisis is not merely one of peripheral economies’ policy errors, but extends to the design of European decision-making and the management of monetary union. These issues are explored with reference to the Irish case: the crisis of the Irish and other peripheral economies points to a crisis at the heart of European politics.

Keywords: economic crisis, EU, European Monetary Union, fiscal policy, Ireland

JEL Classification: E61, E62, E63, F15, H11, H61, H62, H63, H77, O52,O57

Suggested Citation

Hardiman, Niamh and Dellepiane, Sebastian, European Economic Crisis: Ireland in Comparative Perspective (2010). APSA 2010 Annual Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1642791

Niamh Hardiman (Contact Author)

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland

Sebastian Dellepiane

University College Dublin - School of Politics and International Relations ( email )

Belfield
Dublin 4
Ireland

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