Department of "Huh?!": Ireland "Cuir Siao ar Ghabhar Agus Is Ghabhar" Edition
Periodically Tyler Cowen claims that Ireland's experience falsifies "the Keynesian story"--tha austerity has not killed the Irish economy but made it stronger, or that austerity has struck the Irish economy down but it is now rising up more powerful than we cdan imagine, or something:
- Irish recovery from “austerity” update, not exactly the Keynesian story.
- Assorted links/a>: Irish austerity continues to outperform the expectations of its critics across a variety of data points.
- Irish trade surplus hits a new record.
- Ireland ten-year bond rates: CDS spreads are down too, and that happened during a period when the euro crisis got much worse overall. Don’t get me wrong, there is still plenty wrong with the Irish economy, most of all the need to cough up many years of illusory gains and re-plan accordingly. I’m just pointing out that not many of the classic Keynesians predicted this outcome, to say the least.
- Facts about Ireland: "Yet despite cutbacks and tax rises, the country still chalked up a 1.3 per cent expansion in gross domestic product in the first three months of this year." There is more here, and also here, maybe best of all is here. Mind you, this is not a stunning performance. Nor can we expect it to continue, if the eurozone and America are headed for broader troubles, as indeed appears to be the case. Nonetheless it’s a result which most Keynesian theories very strongly predicted against. Ireland also achieved this during a weak time for its major trading partners. Since the crisis started, Ireland’s cumulative adjustment has been about thirteen percent of gdp and now they are growing again. Yet we are not hearing a peep about this.
I can't see why he says this:
I, at least, believe that part of "the Keynesian story" is that there are full employment equilibrium-restoring forces in the economy-but that they are weak, and will not manifest themselves if you keep hitting the economy on the head with a hammer.
