Quarterly Economic Commentary, Summer 2011

Durkan, Joseph and Duffy, David and O'Sullivan, Cormac (2011) Quarterly Economic Commentary, Summer 2011. [Working Paper]

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Abstract

The international economy is in a period of great uncertainty. On both sides of the Atlantic, governments are faced with difficult choices regarding levels of debt. In the United States, this has led to the first ever downgrading of sovereign debt by a major ratings agency. In Europe, governments have agreed major changes to the mechanism for bailing out troubled eurozone countries, although financial markets are not convinced that this is enough. While this agreement has brought about improved terms for Ireland’s bailout, and thus made the road to fiscal sustainability easier, the issue of burden sharing remains to be addressed. At present the cost of the restructuring of the covered banking system has primarily been borne by Ireland, even though the benefits of this restructuring are shared throughout the eurozone.

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