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Article Title: Success for Ireland in Bond Market
Article Source and Date:The Wall Street Journal (online) / March 13,2013
Economic Topic (and chapter):Fiscal Policy (ch. 13)
What is the article about? Brieflv summarize the issues in a non-technical wav'
Ireland sold €5 billion worth of 1O-year bonds, indicating investors' growing confidence in Irish government, and Ireland's success in tackling its crises. The bonds will yield 4.l5o ,less than the initial target of 4.25o/o,making Ireland's cost of borrowing below that of the Italian and the
Spanish governments. The political uncertainty and a recent downgrade of
Italy's debt rating
cause investors to choose Irish bonds over Italian. Ireland's commitment to austerity measures seems to be
working its way to dig the country out of the crises.
the economics of subiect matter of the article?
article? How does
he course exolain
In late 201 0, Irish government was forced to seek loans from the European Union and the
International Monetary Fund due to the huge cost of bailing out its banking system. At that time, investors doubted Ireland's ability to pay back its debts, leading to higher and higher interest rate. In order to restore lender confidence, Ireland imposed severe austerity measurements, which further depresses the economy by dampened cgusumer aggregate demand. The negative multiplier effect even makes the recession worse.
However, the measures seem to be working now. ln fact, lender confidence has regained enough for investors to buy €5 billion worth of Irish 10-year bonds. Furthermore, investors start to feel pessimistic about