Irish Fiscal Policy in EMU and the Brussels-Dublin Controversy Frank Barry University College Dublin and John Fitz Gerald Economic and Social Research Institute, Dublin. June 2001 (Published in Fiscal Policy in EMU: Report of the Swedish Committee on Stabilization Policy in EMU, Stockholm: Statens Offentliga Utredningar, 2001) Abstract There are two reasons why the recent conduct of Irish fiscal policy may be of broad general interest. First is the role that fiscal policy played in laying the groundwork for Ireland’s spectacular economic performance of recent times. Second is the unprecedented reprimand that the Irish authorities received in 2001 from the European Commission and EU finance ministers for breaching the Broad Economic Policy Guidelines agreed upon as part of the commitment to monetary union. We explain, analyse and offer our judgement on these issues, and discuss some further aspects of the fiscal situation including the shortfall in public infrastructure, the planned prefunding of pensions and the political pressures for increased spending at a time of unprecedented surpluses that have arisen in the Irish context. Corresponding author: Frank Barry, Department of Economics, University College Dublin, Dublin 4. Ireland (Frank.Barry@ucd.ie) Paper prepared for presentation to the Swedish Committee on Stabilisation Policy in EMU; Stockholm, May 3, 2001. Thanks are due to participants, and in particular Lars Calmfors, for helpful comments.