The cyclicality of Irish fiscal policy ex-ante and ex-post


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December 20, 2017 | ESRI Working Paper

Authors: David Cronin , Kieran McQuinn

The cyclicality of fiscal policy in Ireland in the budgetary plans put before parliament and ex-post is considered. Data in budgetary documents and particular econometric estimation procedures help address endogeneity issues and provide numerous variable-estimation procedure combinations for assessing cyclicality. Fiscal policy in Ireland is found to be procyclical on both ex-ante and ex-post bases. The evidence is mixed between policy being more pro-cyclical ex-post than was intended at Budget time and there being no difference. With the preventive arm of the Stability and Growth Pact now applying to Ireland, a continuation of procyclical fiscal policy would endanger its requirements being met.

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