IRELAND SHOULD abandon the euro and relaunch the pound according to a US academic.

Speaking at a conference organised by left-leaning think tanks, Tasc and Smart Taxes, Stephanie Kelton, from University of Missouri-Kansas City, said Ireland had erred in giving up its currency in the late 1990s.

She went on to critique the bases upon which the entire euro edifice was founded, saying that its designers underestimated the risks of banking crises and overestimated the feasibility of its rule not to bail out countries with budgetary problems.

William K Black, associate professor of economics and law at the University of Missouri, speaking at the same event, said Ireland’s financial crisis was driven by “fraud” and that the State was in the “grip of crony capitalism”.

Prof Black described UCD economist Morgan Kelly as an “optimist”.

He took issue with Prof Kelly's prescription for the Irish economy, published in an article in The Irish Timeslast Saturday.

“Morgan’s budget plan deepens the recession and hurts everyone,” he concluded.

He also disagreed with Prof Kelly’s suggestion that Irish banks should be handed over to the European Central Bank, saying instead that they should be declared bankrupt.

Among the other speakers, Michael Taft, an economist with the Unite trade union, advocated an increase in public investment to boost economic growth.

He said this was possible because there “are still a number of alternative resources for economic and social investment”.

In a similar vein, Tom McDonnell, an economist and policy analyst with Tasc, said austerity measures would not restore growth.

He urged the Government to ramp up public investment in a manner that should “echo Roosevelt’s New Deal policies . . . and the Marshall Plan policies which engendered the recovery of western Europe in the wake of the second World War”.