Macro and fiscal improvements presented opportunity to move public finances decisively into safer territory

Module Title: Public Policy

Written work

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REQUIRED:
The citation method to be used for this paper is Harvard style.

Produce a 1,500 word analytical review essay on:

An assessment of the fiscal situation of an EU economy following the structure of the Irish Fiscal Advisory Council Fiscal Assessment Report.

Maximum word count 1,500 words.

ASSESSMENT CRITERIA

Standard assessment regulations apply. You must reference your work as required by regulations and must include a bibliography.
Essay lecture

1.
2.
3. Recovery is gradually broadening

Want relative stability in these numbers around 0

4. H1 GDP growth boosted by contract manufacturing

When you look at different countries fiscal position have to take in that there has been a change in how GDP is calculated this year

5. Irish fiscal advisory council

These graphs tell you how much interest you would have to pay

What is the current fiscal position of Ireland?
Interest is quite low so they have more capacity
Would be advised to refinance debts

Standard yield curve goes up – if something goes wrong your yield curve would go down, meaning that your short term debt is more than your long term debt e.g. Greece

Fiscal advisory councils brought in by EU to stop the government doing something stupid

6. Deficit continues to fall

Everyone in the EU has a deficit besides Germany

4 components of European policy making that have to be complied with (assessed by the European semester):-
• Stability and growth pack – golden rule (when you violate SGP you trigger the excessive deficit procedure – potential GDP is calculated if running below can be in nominal deficit)
• Fiscal compact
• 6 pact
• 2 pact

Ireland under excessive deficit procedure was given target of 2018 to reach nominal balance
As this is a long time offered tax breaks as its election year – got given green card by fiscal advisory council as they could have reached nominal balance by 2017 – government then gets put under pressure then from the media

Sometimes these rules will encourage governments to make medium decisions instead of long term decisions – sell things to make immediate cash that 6 years down the road will cost the country more

7. Crisis leaves legacy of high debt levels

60% is the rule however put the line at 100% here as once you get over 100% things get really complicated
If it’s really high you’re looking at debt overhang

In Britain would be looking at around 85% now

8. Uncertainty around growth prospects

Put in error of plus or minus 1%

9. Macro and fiscal improvements presented opportunity to move public finances decisively into safer territory

10. General government debt

11. Deficit sensitive to growth shocks

Take calculations of all your revenue figures – what is the situation if growth is plus or minus 0.5% 1.5%?
You consistently have the ability to talk about figure sensitivity

From 2008 to 2014 had a drop in GDP growth

In Britain less unemployed however no increase in income tax – this is because of 0 hour contracts where people aren’t making enough to pay tax

Consistent nominal wage decline over the last 5 years – we have a problem as our tax revenue base is thinning

12. Importance of Ireland’s new budgetary framework

Lots of corporation tax avoidance in Ireland – also in Finland, Netherlands and the UK

A couple of hundred million would be made from this – wouldn’t fix many problems – but its knock on effects with taxing equality and people becoming distrustful of the taxing systems would be good

Britain has a lot of tax expenditures – a lot of them are related to property
In Sweden not many tax expenditures and these tax expenditures generally are related to public things such as hospitals

Luxemburg is a large tax avoidance country
13.
14. Medium-term profiles in Budget 2015

Bail out countries will have comprehensive profiles that will be easily available

If you were going to assess Britain only 30% of expenditure done by council e.g. in Cardiff have a cut budget so are having to lose 200 jobs

Spain, Italy, Germany have regional budgets
Germany’s central budget perfect however Berlin’s budget is in a mess been in a position of fiscal inequity for a decade since the wall
A lot of this is because people in West Berlin got a pay-out once a month – became a subsidy guzzling machine that they have been trying to wean themselves off since the wall came down

15. Budget 2015 medium-term projections

3 big expenditures:-
• Education
• Health
• Social transfers
In Britain what would be these 3 areas expenditure trend
Go up in health and social transfers – more old people
Flat line in education

Germany education going down as less children so make up for rise in health and social transfers
In Ireland there’s been a baby boom so all areas are going to go up
In every country health is constantly going up
Also social transfers is a problem
NEETs – not in education, employment or training
In Britain NEETs are not a huge problem, however Spain, Italy and Greece this is a huge problem

16. Summary

The report itself

Quarterly reports
Irish ones considered to be very good

www.imf.org
Debt sustainability analysis – .xls available to download from IMF
For the most part a lot of this data will be available for you to fill in
Look at debt sustainability analysis from other countries
Revenue, structural balance and sources of increase in debt to GDP ratio are important areas to look at

www.oecd.org
Will have lots data on European countries

Ec.europa.eu/Eurostat
Goes to regional level as well as country by country
Policy and surveillance
Databases and indicators

He encourages the use of graphs – make sure to explain them – make sure to reference them

Lay it out like a report

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ASSESSMENT GRADING

%
90 – 100 A quite exceptional and outstanding answer, providing insights which would not be available publicly, and would, with some editing, be publishable. In addition to the features of the next section, this range is distinguished by superior organisation economic use of language and totally comprehensive, given the conditions of the exercise.
80 – 89 An answer which demonstrates an excellent understanding of the question and of the complexity of the issues involved. There is a sound basis of relevant factual knowledge and/or the theoretical issues involved. Most of the important issues are dealt with in a detailed, specific and systematic way. There is either some measure of original thinking in the answer or an accurate and comprehensive account is given in a way which demonstrates understanding, for example by structuring the material such that it could not have been based just on reproduction of lecture notes and programme material. Evidence of creativity, critical approach, and wide reading beyond the core subject matter.
70 – 79 As above but a slightly less consistently excellent level. Alternatively, this range of mark may be given for an answer which, while not having original insights, gives comprehensive and accurate coverage of the issues at a high level throughout the answer, without significant omissions or errors.
60 – 69 The answer shows evidence of ability to maintain a personal position in original terms and shows a command of the accepted critical positions with some attempts at innovation. It is lively and highly articulated, giving evidence of knowledge, enthusiasm and control. There is demonstration of a clear understanding of the question and a grasp of the complexity of the issues involved, and there is a sound basis of relevant factual knowledge and/or theoretical issues involved, with few significant errors
50 – 59 The answer shows evidence of an ability to defend on the basis of evidence and personal position in relation to an issue or aesthetic. It shows evidence of evaluation of information and synthesis of generalisations from it. There is clear evidence of selection of appropriate material, logical structure and clear argument. The answer demonstrates an understanding of the major or basic issues in the question, and there is a basis of factual knowledge and/or relevant theoretical issues.
40 – 49 The answer demonstrates an understanding of the major or basic issues in the question. There is evidence of a satisfactory level of analysis and judgement including a statement of criteria. Evidence of selection of appropriate material, logical structure and clear argument are also present. The overall framework is sensible and accurate.
30 – 39 Significant errors may be present. The answer is less well planned compared to above, or poorly planned, with little clear train of thought or development of argument. There is some evidence of ability to collate information and construct generalisations, but with limited comment on the weighting of evidence or opinion.
20 – 29 The answer may meander around the general area of the question, but with very little convenience or structure. There is no evidence of criticism, synthesis or evaluation.
10 – 19 Some notes relevant to the question, but without coherence.
1 – 9 Notes of little relevance to the question or only an introductory paragraph and one or two scattered thoughts
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Graduate Skills assessed: 1a, 1b, 1d, 2a, 2b, 2c, 3a, 3c, 4a, 4b, 6a, 6b, 6c, 7b & 7d.

Skill Category Skill Elements to be developed
1. Communications a. Written
b. Presentation: verbal and written
c. Listening and interpretation
d. Reading and interpretation
2. Numeracy a. Calculation/estimation
b. Understanding conventional numerical data.
c. Handling and interpreting date.
3. Technology a. Use/application of ICT
b. Electronic communications
c. Information retrieval and manipulation
4. Learning and Study a. Personal time management
b. Learning/study/search
c. Learning technology
5. Interactive Group a. Team working
b. Taking initiative
c. Leadership/managing others
6. Problem Solving a. Identifying key issues
b. Planning
c. Managing tasks
d. Creativity and originality
7. Professionalism a. Ethical evaluation
b. Responsibility
c. Entrepreneurship
d. Self reflection evaluation
e. Career/career development awareness.