Professor Michael McMahon:

The type of fiscal policy we argue for is one that is also broadly supportive of the monetary policy, which means that it does not try to fight against monetary policy such that when the economy is inflationary and running above potential, it tries to take some demand out of the economy and at times when the economy is weak, it tries to provide support. Deputy Canney's train argument for investment can just be applied to the whole economy. If Government spending can provide the extra support when it needs it and counter that with providing less support when it is not needed then overall inflation should be more stable and, therefore, we do not get these so-called volatility spikes that we had in the last couple of years. Now, it does not mean that inflation will be perfectly controlled? Ireland is a small, open economy. It will be affected by what happens on international markets in ways that the domestic economy will just have to deal with. However, it can at least contribute on the domestic sides of those inflationary pressures to smooth them out and hopefully lessen the burden of that volatile roller-coaster of inflation that we could face.