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IRELAND Trouble on the horizon?. Fiscal Policy 1987 – Smaller government  less taxes  less spending 1998 - Budget surplus 1998 to 2001  Debt to GDP.

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Presentation on theme: "IRELAND Trouble on the horizon?. Fiscal Policy 1987 – Smaller government  less taxes  less spending 1998 - Budget surplus 1998 to 2001  Debt to GDP."— Presentation transcript:

1 IRELAND Trouble on the horizon?

2 Fiscal Policy 1987 – Smaller government  less taxes  less spending Budget surplus 1998 to 2001  Debt to GDP ratio dropped from 74.1% to 36.6  Debt reduced by 8.5 billions euros

3 Debt and Deficit to GDP Ratios

4 Corporate Tax Rates

5 Foreign Direct Investment

6 Monetary Policy Controlled by the ECB Irish economy not primary basis for ECB actions Interest rate in line with rest of EU

7 IS-LM Model

8 Savings and Investment FDI accompanied by increases in domestic investment Focus on improving education in 1980’s resulted in more efficient workforce Housing boom detracted from technological investment

9 GDP Components as a Percentage of GDP

10 Impending DOOM? Pro-cyclical Fiscal Policies Overinvestment in housing Trouble from EU over corporate taxes

11 Recommendations Property Tax  Revenue Neutral  Encourages Investment in Technology Keep government spending low  Allows more flexibility during downturn Combat EU pressure to raise Corporate tax  Assess likelihood  Use political pressure to thwart  Consider raising corporate tax to lessen rate gap and soften shock

12 Questions, Answers and Guinness


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