Ireland and the euro – from boom to bust and beyond*

Ireland’s experience as an enthusiastic founder member of the euro area in 1999 has been characterised by several distinct phases. The initial years of membership saw a continuation of the unprecedented Celtic Tiger “boom” of the 1990s, largely driven by direct investment inflows of US multinationals. However, as the decade wore on, Irish policy makers permitted the emergence of a property bubble along with a massive surge in government expenditures. With the onset of worldwide financial turbulence in 2008, Ireland was plunged into the worst economic and financial crisis in its history, requiring an emergency bail out from the EU, the IMF, and the European Central Bank (ECB). However, following the successful implementation of the associated adjustment programme, Ireland has experienced a highly impressive economic and financial recovery. This paper reviews events leading up to and during and after the 2008/2009 crisis, with particular reference to the impact of Ireland’s euro zone membership and lessons that might be drawn from this experience.