The bottom line is that real per capita income in the two countries was not very different in the early 1990s but became twice as large in Ireland by 2006. How could that happen?
For instance, real interest rates are positive across the yield curve.5 Going forward, I am weighing the implications of stronger momentum in the economy against potential headwinds from recent developments. On the one hand, if tighter financing conditions restrain the economy, the appropriate path of the federal funds rate may be lower than it would be in their absence.