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Anthony J. Evans The Irish economic story is one well told – Barry (1999), Burnham (2003), De la Fuente and Vives (1997), Gray (1997), MacSharry and White (2000), Powell (2003) and Sweeney (1998) all offer admiring accounts of a remarkable transformation from one of Europe’s poorest economies to one of its most prosperous. Between 1990 and 2007 real GNP quadrupled, and GNI per capita (at PPP) overtook that of the UK. And yet the ragsto-riches story has an Act III: in 2009 Irish GNP fell by 10.7 percent,1 and compared to the 2007 peak had plunged by a huge 17 percent within two years, constituting ‘the deepest and swiftest contraction suffered by a Western economy since the Great Depression’ (Kelly, 2010). Just as economists were trumpeting the employment gains of the Irish ‘miracle,’ we have witnessed a total fall in employment of 266 000 from 2007 to 2009, with an unemployment rate that has doubled from 6.3 percent in 2008 to 13.25 percent in 2010.2 Figure 3.1 shows the massive increase in Irish GNI since 1990, overtaking the UK in 2006 but then falling back below it since 2008.3 The ‘Celtic tiger’ analogy is a curious one. It originates from a 1994 report by Morgan Stanley, and alludes to the infamous East Asian ‘tiger’ economies of the same period. The Austrian theory of the trade cycle rests on a conflict between expected future incomes and the stock of real resources required for production. According to the conventional story,  artificially...