Price regulation, inflation, and nominal rigidity in housing rents. ESRI Working Paper No. 648 December 2019

In this paper, we explore the impact of a housing rent inflation cap of 4 per cent on price changes for tenancy contracts. We assess the implications of the regulations on the share of the market experiencing: 1) a price decline; 2) unchanged rents (nominal rigidity); 3) a positive growth rate below the cap; 4) the maximum allowable growth; and 5) growth above the cap. Our identification strategy uses a multinomial logit difference-in-difference approach applied to a novel micro panel dataset at the property level in Ireland. We find the overall inflation rate fell by 3 percentage points following the regulations, driven by a reduction in the share of individual contracts pricing above the regulatory maximum. We find an increase in the likelihood of nominal rigidity at the expense of high-growth rates. However, we also find a higher probability of small increases, at or below the regulatory level, relative to nominal rigidity after the regulations which is consistent with landlords trying to maintain real returns as price resets are not allowed between tenancies. Heterogeneous effects by landlord type and starting rent levels are evident

The determinants of SME capital structure across the lifecycle. ESRI WP614, February 2019

While differences in capital structure between large and small firms have been extensively researched, relatively less empirical evidence is available explaining cross country differences in the capital structure of SMEs over the life cycle. This is an important gap as many of the theoretical predictions on financing requirements and access can be linked to firm age. In this paper, we explore the determinants of SME capital structure across the age distribution of firms using firm-level panel data for 15 European countries. Our key findings demonstrate the existence of a non-linear relationship between age and capital structure that differs markedly across countries. We also find that firm level collateral and liquidity play a role in determining the age-debt relationship. Finally, we find that the age-debt relationship depends on the country level financial structure with more stock market financing reducing firm leverage disproportionately for young firms while foreign bank lending and bank concentration both increase firm leverage across the lifecycle

COVID-19 pandemic and SMEs revenues in Ireland: What’s the gap? ESRI QEC Special Article September 2020.

New ESRI research has found two-in-five micro-sized firms and one-in-two small and medium-sized firms faced a revenue shortfall in the main COVID-19 lockdown period from March to June 2020

SME investment determinants and financing constraints: A stochastic frontier approach. ESRI Working Paper 699 April 2021.

In this paper, we explore the link between SME investment, firm economic characteristics, and the presence of financing constraints during the post-2008 crisis recovery period in Ireland. We use novel survey data between 2016 and 2018, which disaggregates investment by asset type and allows a granular assessment typically not present in the existing literature. Our approach links investment to the marginal product of capital using a stochastic frontier model to explore, and measure, the presence of constraints. We also test whether liquid assets, indebtedness and investment dissatisfaction impact SMEs investment. We find a clear link between investment and its marginal product with elasticities of between 0.55 and 0.65; a one per cent increase in marginal product leads to a 0.55-0.65 per cent increase in investment. The investment efficiency estimates obtained show the presence of financing constraints. We find evidence of both internal and external finance constraints explaining the investment efficiency of small fixed assets. Higher collateral availability contributes to improve investment efficiency for all fixed assets

Exploring SME Investment Patterns in Ireland: New Survey Evidence. Quarterly Economic Commentary Special Article, Autumn 2018.

An empirical profile of SME investment in Ireland is critical to understanding the growth possibilities and productive capacity of Irish indigenous enterprises. However little is known about SME investment activity outside the more aggregate information. This paper uses new survey evidence compiled as part of the Department of Finance SME Credit Demand Survey to profile the types of assets SMEs are investing in, how firms are financing these investments and what barriers firms face to investment. We provide a detailed exploration of the trends across firms looking at different size classes, age groups, exporting status and sectors. A number of findings emerge. We find that two in every three SMEs invested in their staff; one-in-two invested in fixed assets; and less than one-in-ten invested in intangible assets in 2016. SMEs were in general satisfied with their investment levels or their current capacity with only one-in-five facing a capital gap. For those with perceived insufficient investment, a lack of internal funds, rather than access to external finance, was identified as the main reason. Finally, SMEs reported having significant liquidity levels in 2016. These findings suggest that any perceived sluggishness in borrowing or investment appetite could potentially be demand-side in orientation

SME investment report 2019: Developments between 2016 and 2018. ESRI Survey and Statistical Report Series 86 October 2020.

This report provides a statistical review of the data collected in a specific SME investment module on the Department of Finance Credit Demand Survey. The report presents survey data for the year 2018, with reference to 2016 and 2017 for context and comparison

Estimating the cost of Irish housing for the CPI: A rental equivalence approach. ESRI Working Paper 676 September 2020.

In this paper, we implement a new measure, the rental equivalence approach, in estimating the cost of Irish housing for the purposes of the consumer price index (CPI). The cost of housing composes both the cost of owner occupier housing (OOH) as well as the cost of renting. This work, which is in conjunction with the Central Statistics Office (CSO), follows earlier work, which reviewed the different, existing approaches taken by the CSO in estimating the cost of housing. The rental equivalence approach - used to calculate the cost of OOH - seeks to isolate the consumption element of owning a home, which is consistent with its usage in the CPI. The proposed approach also benefits from the usage of existing rental indices, which are compiled and estimated by researchers in the Economic and Social Research Institute (ESRI) for the Rental Tenancy Board (RTB)

The effect of the implementation of the 2003 Mid-Term Review of the CAP on technical efficiency of beef production. A comparative analysis

The 2003 Mid-Term Review introduced decoupled payments as part of the Common Agricultural Policy; however it allowed the maintenance of limited coupled support. As a result, there are significant differences in subsidies granted in each Member State. We aim to explore the effects on technical efficiency of the different implementations of support payments in the beef sector in selected countries. This analysis contributes to the literature by exploring the effects of both coupled and decoupled support payments on farm level economic performance. For this purpose, country specific output distance functions are estimated together with the effects of a series of technical efficiency drivers, including subsidies, implementing stochastic frontier analysis. Unbalanced panel datasets for France, Ireland, Germany, Scotland and England and Wales are built using Farm Accountancy Data Network information, for the years 2005 to 2012. Our estimates show that decoupled payments had a positive effect on efficiency in all countries, while the retention of coupled support had a significant negative impact on technical efficiency on French beef farms. This suggests that the maintenance of coupled support might compromise farm economic performance in the sector

Technical efficiency and technology heterogeneity of beef farms: a latent class stochastic frontier approach

A high degree of heterogeneity has been observed amongst Irish beef farms, with a diverse range of production systems employing different practices and technologies. Such variation can compromise the estimates obtained when stochastic frontier analysis is used to estimate the frontier under which farms in the sector operate, since it relies on the assumption that all farms operate under the same technology. A latent class stochastic frontier model is implemented using an unbalanced panel dataset constructed from farm level data for Irish beef farms between the years 2000 and 2013, in order to identify different technologies. Results obtained suggest that a single frontier model overestimates technical inefficiency compared to the model where technology heterogeneity is taken into account. Overall results highlight the importance of correctly addressing technology heterogeneity in order to obtain reliable technical efficiency measures; and the comparison of the main characteristics for different classes identified suggest the need of targeted policy measures