European Monetary Union Inflation Quantitative methods Ireland
Economic & Social Research Institute
MacCoille, Conall; McCoy, Daniel. 'Economic adjustment within EMU: Ireland’s experience'. - Economic & Social Review, Vol. 33, No. 2, Summer/Autumn, 2002, pp. 179-193, Dublin: Economic & Social Research Institute
This paper examines the contribution of Balassa-Samuelson (B-S) type effects to
inflationary pressures in Ireland. Irish productivity measures are exaggerated by foreign multinationals engaged in high value-added activities. These measures suggest that high productivity in the traded sectors explain most of the inflation differential. Using adjusted measures to account for the multinational effect, shorter-term demand side factors become more significant in explaining the inflation differential. Domestic fiscal and incomes policies are therefore an important source of adjustment for the Irish economy within a monetary union.
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