Yesterday saw some of the worst flooding in Dublin in recent memory. Today’s post examines the economics behind the floods, in particular what economics can tell us about these events and what they can tell us about economics. Building on doctoral research, estimates are presented of the effect that flood-risk, living near a river, has on house prices and on rents. The baseline appears to be a 5% cost for those living near rivers. Read more
The Nobel Prize in Economics, awarded yesterday, highlighted the important role of expectations. The IMF’s World Economic Outlook has given the world an important barometer of expectations about the economic climate and how they change over time. This post uses IMF figures to estimate how many jobs will be lost over the period 2011-2015 in the Eurozone, the USA and in the rest of the developed world, due to politicians’ inaction on the debt crisis over the last twelve months alone. Read more
The latest Daft Report was released this week and shows asking prices up to 55% below their peak. This post uses the latest figures to estimate when property prices in Ireland will bottom out. It outlines two scenarios, one where the country returns to normal lending conditions, and one where it does not and risks another boom-bust cycle. With the correct steps by the Government, property prices could stabilise in early 2013. Read more