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The Return of Ireland’s Housing Bubble

Gerlach, Stefan, (2016), “The Return of Ireland’s Housing Bubble”, Project Syndicate, 14 Ιουλίου

After having endured the collapse of its housing market less than a decade ago, Ireland has lately been experiencing a blistering recovery in prices, which already have risen in Dublin by some 50% from the trough in 2010. Is Ireland setting itself up for another devastating crash? Ιt’s no secret that the collapse of asset bubbles carries massive financial and social costs. With construction activity and investment spending grinding to a halt, sharp recessions – which cause tax revenues to fall, even as surging unemployment demands increased social spending – are unavoidable. Taxpayers may even be asked to shore up financial institutions’ capital base. The last time that happened in Ireland, it cost more than €60 billion ($67 billion), or about 40% of GDP.

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