The European Context of Ireland’s Economic Crisis

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Title: The European Context of Ireland’s Economic Crisis
Authors: Dellepiane, Sebastian
Hardiman, Niamh
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Date: 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.
Type of material: Journal Article
Publisher: Economic & Social Research Institute
Keywords: Economic crisisEUEuropean monetary unionFiscal policyIreland
Language: en
Status of Item: Not peer reviewed
Conference Details: Originally presented at: American Political Science Association Annual Meeting, Washington DC, 2-5 September 2010. This version available on Social Science Research Network
Appears in Collections:Politics and International Relations Research Collection

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