Professor Alan Barrett:

The Deputy began his questioning referring to simplistic economic models. We use that term when we talk about forecasting but when it comes to policy analysis and its impact, we have the HERMES model referred to by Deputy Doherty earlier, which is housed at the ESRI. One of the things one finds when one does the sort of policy simulations mentioned by Deputy Spring, which taps into what Mr. Barnes said, is the importance of what happens in Europe is so critical that it feeds into the model quickly and one sees the effects are seen dramatically. This is the great difficulty. If Europe stays where it currently is for a prolonged period, things will be difficult. We can also then measure consumption and what would happen if we experienced a turnaround in consumption. That is the virtuous cycle that we would like to see because consumption is not just good as an end in itself because it tends to be tax and employment intensive and one gets the positive feedback loops that one wants. We can do the policy analysis - I do not have the figures in my head - with a much greater degree of sophistication. It is not perfect but there is a tool to do the things the Deputy is asking about. Intuitively, they show up if one runs them through the model.