The BIS, which functions in some respects as a world central bank, possesses an economics team that is among the best to be found anywhere.

Its annual report on the state of the global economy is, therefore, a mustread for those interested in such matters; and this year's survey makes for disquieting reading.

While acknowledging the positives . . . most notably, a third consecutive year of historically strong and geographically widespread world economic growth . . . it sees cause for concern about the sustainability of the expansion.

Too much cheap money for too long, says the BIS, has caused big (and still growing) imbalances. Among others, asset prices in many economies look inflated and so borrowers have never been so indebted. That they continue to borrow, and with considerable haste, has caused Basel's dismal scientists to fret all the more.

Also causing nerves to fray is the inflation outlook. Prices are on the rise internationally and many of the factors that have contained global inflation in recent times may no longer be at play. Worse still, new inflationary sources are emerging, putting further upward pressure on prices.

The world's macroeconomic policymakers are facing an increasingly difficult balancing act. The necessary, and ongoing, raising of interest rates is needed to rein-in inflation, but this could also cause asset prices to go sharply into reverse. If they do, the global economic expansion could be halted in its tracks, if not derailed entirely.

Closer to home, two leading private and public sector economists have joined forces to assess how one of the major global risks identified by the BIS . . . greater private indebtedness . . .threatens Ireland's economy.

Because much comment on the phenomenon has been superficial, many of the points made by Austin Hughes of IIB and David Duffy of the ESRI are welcome and timely.

While the IIB/ESRI report limits itself to comparisons with the UK, its conclusions apply more widely to the English-speaking world into which Ireland is often mistakenly lumped.

Unlike other inhabitants of the Anglosphere, and contrary to a commonly-held perception, Irish consumers have not gone on a reckless spending spree, let alone a debt-fuelled one.

Consumer spending growth in Ireland has been driven by solid fundamentals, such as higher employment and incomes, not borrowing or extraction of equity from homes whose value has appreciated so strongly. Further more, unlike other English-speakers all the way to Australia, the evidence suggests that the Irish have not stopped saving.

These facts give cause to believe a worst-case scenario for the Irish economy may not be as appalling as one might conclude at first glance. To see why, consider the anatomy of boom-and-bust cycles in economies where savings have fallen and strong asset-price inflation has created a "wealth effect".

Where savings rates fall in good times, they often shoot up when times turn bad. This causes consumer spending . . . by far the most important component of any economy . . . to slow or contract. This, in turn, leads to higher unemployment and a further decline in consumer spending. A classic vicious recessionary cycle is thus entered into.

The stability of savings in Ireland, which contrasts strongly with their volatility in other Anglophone countries, gives some reason to believe that they would not rise abruptly in the event of a shock to the economy. This suggests that the trough of any downturn would be shallower, and therefore less painful, than in other economies.

As important is the effect of property prices on consumption. One of the ways rising asset values affect consumption is if equity extraction occurs. But liquidating part of the value of a property for spending purposes negatively affects personal balance sheets. There is a tendency for those who have cashed in while property values increase to rebuild their balance sheets when those values decline, thus exacerbating the slump in consumption.

Because there is little evidence in Ireland that those who have benefited from rising property prices have converted their paper gains into cash by methods of equity extraction, there is less reason to think that they would alter their consumption patterns if there were to be a downturn in the market. Here again, less excess during good times should mean a less serious hangover.

None of this is to say there are not big risks facing the Irish economy, merely that if things turn bad they may not plum the recessionary depths experienced in other countries in the past when boom turned to bust.

It should also be said that the risks are getting bigger. Among others, debt levels are very high by any standards, and regardless of the reason for getting into debt, it will have to be serviced come what may.

In the short term, the risks to the Irish economy come from abroad (the downside of being among the most globalised economies in the world is that what happens elsewhere has a bigger effect at home). And as the BIS makes amply clear, there is much that could go wrong.

Having lived with warnings from kill-joy economists for more than a decade, many in Ireland are understandably sceptical about the prospect of slump, and some even appear to feel invulnerable. But believing in a bullet-proof tiger would be a mistake. With warning lights flashing at home and abroad, it would be prudent to be ready for bad times.

Dan O'Brien is a senior editor at the Economist Intelligence Unit