Monthly Archives: February 2013

At 10%, the Irish investment rate (Gross Fixed Capital Formation / GDP) in 2011 was less than half the OECD average in 2011, half the Eurozone average, only four fifths that of Iceland, the next lowest OECD member at 12.7%, and less than Greece (16.2%), Portugal (17.9%), Italy (18.9%) and Spain (21.6%).

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No, this isn’t about painting the Irish economy as a rotting carcass.

It’s about breaking down Irish GDP into its different components, learning how to read the national accounts, looking at their long-term trends and how they changed when crisis struck from late 2007 onwards.

When economists agree that a certain formula must be true by definition, they call it an ‘identity’. A whole which is the sum of its parts is a good example, and one notable such example is the national income identity based on the sum of all expenditures in an economy in any given year:

Y = C + I + G + X – M

This simply means that Gross Domestic Product (GDP, or Y) is the sum of all personal consumption, investment, government expenditures on goods and services, plus exports, minus imports (ignoring, for the sake of simplicity, statistical discrepancies and changes in stocks or inventories, which are typically quite small in any event). Continue reading →

The results of the latest Survey on Income and Living Conditions makes for interesting, if depressing, reading. The latest batch of data includes 2011 measures for income, inequality, poverty and deprivation as well as some significant revisions to the 2010 data.

2011 was the third successive year of falling disposable income, increasing poverty and deprivation.

• Annual equivalised disposable income fell 3% year on year to €21,440 in 2011, down 12% from its 2008 peak of €24,380 and back at 2006 levels. When inflation is taken into account, despite a brief period of falling prices during 2009-2010, real disposable income is back at levels not seen since the early 2000’s. (equivalised simply means that when presenting household income, the data controls for the fact households are of varying size). Continue reading →