Foreword to Special Edition of The Economic and Social Review

Abstract

Economic policymaking in Ireland has long been flying blind. Few, if any, reliable measures of the Irish business cycle were available before the last crisis. In fact, many estimates were deeply misleading in retrospect. This is the situation the Irish Fiscal Advisory Council was facing in 2013 when it was given a mandate to endorse the government’s official macroeconomic forecasts. Short-term forecasts looked to be within a reasonable range of possible outcomes. But estimates of medium-term growth and of the economy’s cyclical position – based on the EU’s Commonly Agreed Methodology – were deemed implausible, including by the Department of Finance. Yet, in the absence of alternatives, the Council found itself in the uncomfortable position of having to verify that the standard approach was, at minimum, correctly implemented.