ABSTRACT
This chapter explores the extent to which institutional reforms can inform future political behaviour and counter the adverse effects of pro-cyclical budgetary policy. It outlines the fragmented Irish budgetary process and institutions of financial management prior to 2008, and profiles the budgetary trends leading up to the crisis. The chapter explains that the centralisation of budgetary and financial controls within a new government department was an essential ingredient for the introduction of new budgetary reforms during the period of retrenchment, but that such controls become more difficult to enforce as the budgetary situation improved. The Irish economy had been growing rapidly after 1994 in the wake of the completion of the European Single Market, as a fresh round of mostly US investments kick-started the 'Celtic Tiger'. Macroeconomic performance in the run-up to European Monetary Union in 1999 was very good: budgetary processes were disciplined by the external constraints of the Maastricht Treaty.
