#Open journalism No news is bad news

Your contributions will help us continue to deliver the stories that are important to you

Support The Journal
Dublin: 5°C Saturday 4 December 2021

ESRI analysis comes ‘out of thin air’

Nobel Prize winner Paul Krugman really doesn’t agree with our economic policy.

Paul Krugman has some harsh words for the ESRI
Image: LANDOV/Press Association Images

The ESRI (Economic and Social Research Institute) has been lambasted by a Nobel Prize winning economist this afternoon.

Blogging for the New York Times Paul Krugman says the analysis in this morning’s ESRI report, which calls for €7.5bn in cuts over the next four years  is pulled “out of thin air”.

Krugman is highly critical of the institutes approach, arguing that further cuts may be self-defeating. Krugman is speaking as the government met today at Farmleigh to cut more than €3bn from the 2011 Budget, a move endorsed by the IMF.

Krugman says: “the policy conclusions are not, in fact, derived from the analysis — they come out of thin air. The authors simply assert that more austerity now would lead to a lower risk premium and hence higher growth, based on no evidence I can see.”

He dismisses the report saying it is a “pure appeal to the confidence fairy.”

This is not the first time Krugman has slammed austerity measures in Ireland.  In June, he wrote: “All that savage austerity was supposed to bring rewards… But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.” Krugman’s comments had been brought about by an article by a feature in the New York Times about Ireland.

About the author:

Daire Hickey

Read next: