What If Ireland Defaults? (2012) - Plot & Excerpts
3 Debt Restructuring in Ireland: Orderly, Selective and Unavoidable Constantin Gurdgiev Constantin is adjunct professor at the School of Business, Trinity College Dublin, and a director of St Columbanus AG, a Swiss asset management company. An internationally syndicated newspaper columnist, he blogs at trueeconomics.blogspot.com. Ireland’s Road to Debt Restructuring In a 2011 research paper titled ‘The Real Effects of Debt’, Bank for International Settlements (BIS) researchers S. Cecchetti, M. Mohanty and F. Zampolli provide analysis of the long-term effects of debt on future growth. The authors use a sample of eighteen Organisation for Economic Co-Operation and Development (OECD) countries, not including Ireland, for the period of 1980–2010 and conclude that ‘for government debt, the threshold [beyond which public debt becomes damaging to the economy] is in the range of 80 to 100% of GDP [gross domestic product].’ The implication is that ‘countries with high debt must act quickly and decisively to address their fiscal problems.’ Furthermore, ‘when corporate debt goes beyond 90% of GDP, [the] results suggest that it becomes a drag on growth.
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