UL Economist Says Ireland Needs Own Sovereign Monetary Policy

Business & Finance - Economy

Monday, 22 March 2010 00:00

Written by Mark Dunphy

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A senior economist at the University of Limerick (UL) has said the Irish Government has no alternative but to implement unpopular policies in a country without its own sovereign monetary policy.

Professor Stephen Kinsella, in an interview with The Christian Science Monitor, said: “The big story of 2009 and 2010 is fiscal consolidation – to what extent did the finance minister stop the wheels coming off the bus? Well, we have a yawning budget deficit that is being plugged by borrowing”.

He added: “The problem is we cannot devalue our currency or pursue quantitative easing policies like the UK has done, so all of the adjustments come through the wage channel. This means more people have to lose their jobs, more people have to endure pay cuts and see living standards fall."

"A prominent German economist said to me at a conference, 'would you stop pretending you are a country' – and he's right," commented Mr. Kinsella.

Stephen Kinsella UL from CFA Ireland on Vimeo.