The Global Financial Crisis and its Budget Impacts in OECD Nations Fiscal Responses and Future Challenges
Fiscal Responses and Future Challenges
Edited by John Wanna, Evert A. Lindquist and Jouke de Vries
Chapter 11: Managing Ireland’s budgets during the rise and fall of the ‘Celtic Tiger’
The rise and decline of the Irish economy in the 1990s and 2000s has been a dramatic roller-coaster ride. General government debt as a percentage of gross domestic product (GDP) exceeded 100 percent in the late 1980s. The government addressed this problem through economic policies to stimulate growth and by establishing the National Treasury Management Agency to manage the national debt and borrow on behalf of the Exchequer. The so-called ‘Celtic Tiger’ boom started in the late 1980s to early 1990s. From 1987 to 1993 there was a period of stabilization and recovery after the recession of the 1980s. Then there was a period of very strong economic growth from 1993 to 2000, with the average growth of GDP being 9.3 percent per year. Employment also increased rapidly, with unemployment falling from 16 percent to 4 percent, effectively full employment. Irish incomes converged rapidly with the European Union (EU) average. Support from structural funds from the EU, amounting to roughly 3 percent of GDP per annum in the early 1990s, also helped finance an expanded public infrastructural program. Ireland was seen as an exemplar nation in the EU, a model to follow for peripheral and accession countries, its virtues extolled by those promoting the benefits of economic and monetary union.
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