1. IRELAND Trouble on the horizon?

2. Fiscal Policy 1987 – Smaller government  less taxes  less spending 1998 - 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