Dr. Conor O'Toole:

I will add something in terms of how the impact of the Ukrainian crisis feeds through to the Irish economy. As Dr. McQuinn said, one of the main channels is the uncertainty channel. It is likely to deter business investment, in that businesses will postpone investment decisions from now until they see the situation becoming a little clearer, and households may engage in higher precautionary savings. However, these are channels that might take a little longer to work through the system.

Two direct effects that we know will happen are that it will feed into higher food prices and higher energy prices. We will see these direct effects in the economy quickly. Targeted measures should directly help with the cost of living for households that spend a disproportionate amount of their budgets on the items in question, namely, lower income households. The International Monetary Fund, IMF, has warned in its statement on the Ukrainian crisis that lower income households globally are going to feel the effects of this crisis first because they are the ones that spend more of their budgets on food and energy.

When discussing the types of instrument that we could use and calibrate to try to direct the impacts the most, it would be those measures that are most targeted at lower income households that spend more of their budgets on energy and food costs. That is the type of directionality that should be applied in calibrating the instruments.