The purpose of this chapter is to examine Irish economic and fiscal policy from 2002
to 2014, looking particularly at the experience of austerity from 2009 to 2013 using
macroeconomic data.
The success of the Irish experience relative to other countries within adjustment
programmes is frequently used by policy makers across the world to justify the
imposition of austerity on other countries. Ireland is very often touted as the poster
child for such policies. The IMF's Christine Lagarde cites Ireland's experience as
setting "standards for the correct measures to follow towards a recovery".
This chapter will try to answer why, exactly, a small open economy like Ireland was
able to marry growth and large scale fiscal consolidation. The answer lies in the
institutional structure of the economy, its openness and particularly the sectoral
structure of the economy.