With ‘g’ greater than ‘r’, should we be borrowing to increase Irish housing supply? ESRI Special Article June 2021.

In this Article, we address one of the major policy issues in the Irish economy at present, namely the undersupply of residential housing. Particularly given the recent, adverse impacts of pandemic-related public health restrictions on housing supply, we argue that a significant increase in the provision of publicly provided housing is now required to help bridge the growing gap between actual supply levels and the structural demand for housing. To investigate the public financing of such an investment we examine the future conduct of Irish fiscal policy. Given the expected strong post-COVID-19 performance of the Irish economy and the likely continued low cost of sovereign debt, we argue that the adoption of a consistently negative Government primary balance can be pursued under a prudent and sustainable set of conditions. Such a policy could provide the Exchequer with an additional annual amount of between €4 billion and €7 billion