Efficient frontiers and fiscal stability : an ex-ante and ex-post application to the Irish public finances

Revenue from taxation has become more volatile after the global financial crisis. In this paper we provide a mean-variance analysis for key taxation components in the Irish fiscal accounts. This approach is a useful complement to the more standard measures of fiscal developments, which typically focus on aggregate public finance indicators. In an Irish context, the analysis reveals that for a given taxation return, sourcing an increased amount of revenue from direct as opposed to indirect sources of taxation post 2008 would have provided a more stable fiscal environment.