Economic Aspects of Personal Injury Compensation in Ireland

Victims of events including road accidents, workplace injuries and medical negligence are compensated in the Irish legal system through once-off lump-sum awards. In cases where victims have suffered incapacitating injuries but have extended life expectancy, these awards include provision for loss of earnings and life-long medical care that can run into millions. Where liability is contested, significant litigation costs also arise, but even where liability is admitted, the determination of quantum is complex, requiring evidence about future medical care costs, loss of earnings, life expectancy and the returns to be expected from the investment of the lump sum award. The once-off lump sum system of compensating successful plaintiffs has been criticised over the years from both legal and economic perspectives, and change was recommended in a Law Reform Commission report in 1996. Mr. Justice Nicholas Kearns, President of the High Court, established recently a working group to consider the issues involved and charged it to report by November 2010. Since 1995, courts in the United Kingdom have been free to award periodic payments, as distinct from once-off lump sums, where the parties agree, and since the passage of the 2003 Courts Act, whether or not they agree. It is opportune to consider whether periodic payments should be introduced in Ireland and this paper reviews the principal economic aspects of the issue. The paper also considers whether a move to periodic payments would require changes to the government bond market, specifically the issuance of long-dated index-linked Exchequer debt.Compensation awards, catastrophic injury, lump-sum compensation, periodic payments, index-linked annuities

Owner-Occupied Housing Costs and Bias in the Irish Consumer Price Index

The treatment of owner-occupied housing costs is a recurring problem in the construction of consumer price indices, and there are competing methodologies. In the most widely-used Irish index, the Payments Approach, which attaches a weight to a term involving historical house prices and an interest rate, is used to measure these costs. It is argued that this has resulted in a substantial over-statement of inflation in recent quarters, and that the over-statement will continue for some time. The Irish version of Eurostat’s Harmonised Index of Consumer Prices, recently running well below the CPI, is a more reliable guide. Few national statistical offices use the Payments Approach, and it is argued that the procedure used in Ireland should be reviewed.Consumer Price Index; Cost of Living Index; Payments Approach; Owner-Occupied Housing

Ireland’s Second Fiscal Consolidation – Lessons from the Last Time

For the second time in a generation, Ireland is in a deep fiscal crisis, with double-digit borrowing, escalating debt and concerns about the country’s solvency in international debt markets, reflected in the largest adverse bond spreads of any Eurozone member. What’s different this time is that the fiscal system’s second crisis since the foundation of the state has coincided with the banking system’s first. The banks have lost a large portion (on worst estimates, all) of their capital and survive on liquidity furnished, on a prodigious scale, by the European Central Bank. Parallels with the first Irish fiscal crisis in the 1980s are of limited value given the quite different circumstances. The next section argues that fiscal consolidation post-1987 was less daunting than is likely to be the case over the next few years, and that the role of expenditure cuts under the first Bord Snip has been exaggerated in journalistic renderings of the history of the period. The deterioration in the public finances has been extraordinarily rapid – even with substantial tax rate increases, revenue has fallen far more rapidly than the tax base, while spending has continued to advance, despite the widespread perception of cutbacks. The conduct of fiscal policy since 2000 is reviewed in section three, and the prospects for a medium-term fiscal consolidation in section four. The paper concludes with some lessons from Irish experience for politicians - and for economists.Crisis, Consolidation, Lessons

"Alternative Seasonal Adjustment Methods for Aggregate Irish Macroeconomic Data"

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OWNER-OCCUPIED HOUSING COSTS AND BIAS IN THE IRISH CONSUMER PRICE INDEX. Quarterly Economic Commentary, Autumn 2007

The treatment of owner-occupied housing costs is a recurring problem in the construction of consumer price indices, and there are competing methodologies. In the most widely-used Irish index, the Payments Approach, which attaches a weight to a term involving historical house prices and an interest rate, is used to measure these costs. It is argued that this has resulted in a substantial over-statement of inflation in recent quarters, and that the over-statement will continue for some time. The Irish version of Eurostat’s Harmonised Index of Consumer Prices, recently running well below the CPI, is a more reliable guide. Few national statistical offices use the Payments Approach, and it is argued that the procedure used in Ireland should be reviewed

An Econometric Model of Non-Agricultural Stock Changes. Quarterly Economic Commentary, December 1977

Macroeconometric models pay particular attention to the equations dealing with the major components of aggregate demand, such as consumption, investment and exports. In the Central Bank's econometric model [l], investment is broken down into three components: residential investment, non-residential investment and stockbuilding. While stockbuilding is a relatively small proportion of aggregate demand, it is a volatile magnitude and has traditionally been accorded an important place in the study of economic fluctuations. This note is devoted to a discussion of the stockbuilding equation. The following sections deal with the models tested, the empirical results and the conclusions. Data, sources and methods are given in the appendix

An Econometric Model of Non-Agricultural Stock Changes. Quarterly Economic Commentary Special Article, December 1977

Macroeconometric models pay particular attention to the equations dealing with the major components of aggregate demand, such as consumption, investment and exports. In the Central Bank's econometric model [l], investment is broken down into three components: residential investment, non-residential investment and stockbuilding. While stockbuilding is a relatively small proportion of aggregate demand, it is a volatile magnitude and has traditionally been accorded an important place in the study of economic fluctuations. This note is devoted to a discussion of the stockbuilding equation. The following sections deal with the models tested, the empirical results and the conclusions. Data, sources and methods are given in the appendix

Economic Aspects of the Irish Exchange Control Regime. Quarterly Economic Commentary Special Article, April 1980

From the foundation of the State until March 1979, the Irish currency was maintained in a fixed one-to-one parity with the pound sterling. Aside from the 50% deposit requirement on capital inflows through the banking system imposed by the Central Bank in recent years, there were no significant restrictions on the movement of funds between Ireland and the sterling area. Capital movements between Ireland and non-sterling countries were subject to exchange control regulations broadly similar to the UK's own, although in practice they were administered in a somewhat more liberal fashion. The Irish controls could be seen as, in effect, part of the price of our membership of the sterling zone, since the UK's own controls would have been circumvented very readily if Ireland had presented an uncontrolled "window" to the rest of the world. So purchases of financial assets in non-sterling countries had to be financed through the dollar premium pool or through foreign currency loans