Dáil Éireann Debate, Tuesday - 28 February 2017
197. Deputy Joan Burton asked the Minister for Finance the status of the proposed development of alternative models for forecasting medium-term potential growth as has been suggested by the Irish Fiscal Advisory Council as an additional safeguard for detecting overheating in the economy. [9937/17]
View answerEnsuring the plausibility of potential output estimates remains a key priority for my Department, especially given their relevance in the fiscal surveillance process and calculation of fiscal space. The shortcomings of the EU's harmonised methodology have been previously highlighted by my Department.
As the Deputy is aware, substantial efforts have been undertaken by my Department to develop alternative models for estimating potential output for Ireland. Significant work has also been undertaken aimed at ensuring the rigour and stability of the alternative set of estimates. Progress on this work had been delayed by the distortions in the 2015 national accounts revisions. The intention is to detail this work in a forthcoming Department of Finance technical paper.
Notwithstanding this progress on the development of alternative models, the harmonised methodology remains the binding methodology in the context of EU fiscal surveillance. However, progress also continues to be made at technical level - with participation in the relevant working group of all Member States - on improving this harmonised methodology, and Ireland continues to actively contribute on this front. Indeed, recognising the importance of this work from an Irish perspective, the relevant working group at a European level is chaired by a senior official in my Department.
Finally, I would stress that, in the assessment of the cyclical position of the economy, my Department takes into consideration a wide range of indicators, in addition to supply-side estimates.
