Repeating History: Fiscal Squeeze in Two Recessions in Ireland

Ireland has been taken as an exemplary case of fiscal adjustment, not once, but twice, in its recent history: firstly in the late 1980s, more recently in the implementation of a sharply contractionary policy mix after the crisis of 2008, underpinned by the terms of the international loan agreement negotiated in November 2010. History has in a sense repeated itself, first as tragedy, we might say, and then as tragedy again. In both cases, Ireland attracted international plaudits for the determined way in which it implemented fiscal consolidation measures. Indeed, since the experiences of the 1980s were followed by a return to growth within a few years, Ireland was one of the key cases on which the argument for 'expansionary fiscal contraction' was made. The lessons from Ireland have therefore played an important role in shaping international conventional wisdom in the post-2008 period.