Quick Follow-Up on the Fiscal Council Story

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Third time’s a charm. Following on from two previous posts (here and here), tracking the stat-bending the Irish Fiscal Advisory Council was engaged in, we can now put that issue to rest.  The Fiscal Council has finally published a correction and with it has published a third version of their first report.  Now the crucial section reads:

‘Even though domestic demand has fallen significantly (at least in part due to the austerity measures undertaken) and domestic demand has remained weak, the General Government deficit is improving. The underlying deficit has declined from 11.8 per cent of GDP in 2009, to a projected 10 per cent this year. Austerity measures are working to reduce the deficit.’

They finally got the numbers right – the underlying deficit numbers. So, the first version is cleaned up, while the second version has gone down the memory hole – as if it never existed.

Now that the Fiscal Council has got the numbers right, we can start having a debate over their main contention:  that the ‘austerity measures are working to reduce the deficit‘.

In short, the Fiscal Council wants us to believe that austerity measures amounting to over 12 percent of GDP resulting in a deficit-reduction of 1.8 percent constitutes ‘working‘.

Discuss.

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