They're off! As expected, Taoiseach Enda Kenny called the election last Wednesday and we are now one week into a short three-week campaign before the country votes on Friday, February 26.

No sooner had the election race started last week than all the parties were trying to buy our votes with vast amounts of money that don't exist yet -- and much of which may never exist.

Even the government parties, Fine Gael and Labor, who pose as models of fiscal rectitude, have been at it. Spooked by some slippage in the most recent opinion polls, they have abandoned the strategy of presenting themselves as paragons of prudent economic management and have reverted to the old style politics of bribing the electorate. So much for all that stuff about being the only people who can be trusted to run the economy responsibly!

Their slogan is "keep the recovery going" by voting the present government back in, but at the first sign of losing ground in the polls they have thrown their fiscal rectitude out the window. Instead they are promising billions in extra spending and tax cuts to woo voters. And they are doing this even though we are still running budget deficits and we are still up to our necks in massive debt and will be for years to come, despite the recent recovery.

So how is such largesse possible? Where is all this extra money going to come from? Outer space?

Well, that's not a joke. It's coming from space all right, from a little known galaxy called Fiscal Space. It's a place most of us had never heard of until recently but which has dominated the first week of the election here.

What exactly is Fiscal Space? It's a relatively obscure term which economists often use when discussing a country's debt sustainability.

In layman's language, it's the amount of extra money that might be available in a country in the future from economic growth. In the context of the Irish election, it's being used to denote the extra funds the next government will have available over its five year term from 2017 to 2022 above what was available this year.

It's based on various assumptions, the most important of which is economic growth. But it's also influenced by other factors, like inflation, tax levels, demographics, global trade and so on.

So Fiscal Space is very dependent on the assumptions that are made about these factors when trying to predict the future. In the Irish context, since we are a small open economy, making predictions about the future is a very hazardous business.

In making such predictions in the past we've been wrong more often than we've been right. Even making predictions for one year ahead can be difficult as we saw last year when the budget for 2015 underestimated tax returns here by €3 billion. Yet politicians here are now spouting figures for our Fiscal Space over the next five years as though they were gospel!

The fact is the amount of Fiscal Space you come up with will vary with the assumptions you make. That explains why in the first week of the campaign there were three different estimates of the Fiscal Space we will have over the next five years, with the government parties claiming it will be €12 billion, the Department of Finance saying it will be €8 billion and the Fiscal Advisory Council (the independent expert body) predicting it will be €3 billion.

The opposition parties, mainly Fianna Fail and Sinn Fein, have been jumping up and down claiming the government parties are manipulating the figures so they can make extravagant promises of extra spending. But it's more a matter of what is included and what is left out and of the assumptions that are being made.

The Fiscal Advisory Council figures, for example, take more account of inflation in state spending and the cost of an aging population. And there are concerns about the level of tax returns and likely increases in the state payroll.

But the biggest unknown in all this is the assumption being made that the Irish economy will continue to grow over the next five year by at least three percent a year. Yes, we have done very well over the past two years ("the fastest growing economy in Europe") but this has involved an element of catch-up after the crash. Keeping it going will be more difficult and high growth here is far from certain given the fragilities in the world economy right now.

Ireland relies heavily on exports and world trade is faltering due to the slowdown in China, the chaos in the oil market, high debt levels in many countries and other factors. We also face the uncertainty of what an exit by Britain from the EU would do to our economy, something that is looking more likely every day.

Then there is the growing uncertainty in Europe, with Spain and Italy facing very serious economic problems, which could also have an impact on us if the money markets become nervous.

The fact is that our recovery has been more a result of luck and of the discipline imposed by the Troika under the bailout program than anything done by Irish politicians. We have been lucky that interest rates and oil prices are extremely low, both of which are helping us. And the Troika program put us on the path to recovery.

But the Troika are now gone and the air is thick with promises of spending money we don't have. We were supposed to end budget deficits next year, but balanced budgets here could now be several years away given all the promises of tax cuts and extra spending that are being made. This is being done even though the economic outlook for Ireland is far from certain.

In addition to concerns about global trade and exports, our huge debt burden after the crash and the bailout makes us particularly vulnerable to interest rate hikes. Even if we have balanced budgets in a couple of years and no longer have to borrow for day to day spending, we still have to service our enormous national debt.

Over the next few years we have to refinance large chunks of national debt that are maturing, and if interest rates go back up to more normal levels this alone could punch a lot of black holes in our supposed Fiscal Space.

The bottom line on all this as the election campaign gets going here is that a lot of hot air is being used here to talk about money we don't have. What the politicians are doing is arguing about how to spend money that MIGHT become available over the next five years when the truth is no one knows exactly what is going to happen. The voters, unsurprisingly, are likely to take it all with a mountain of salt.

The reality is that we don't have the money for large increases in state spending or in tax cuts at present because we're still running a budget deficit and we cannot be certain about having much extra money -- if any -- to spend in the next few years. There is, of course, lots of useful discussion we could be having about rebalancing state spending here to make it much more effective. And that is something we will be discussing here in the coming weeks as we examine what the various parties are proposing and what the outcome of the election is likely to be.

What is particularly disappointing about all this at the end of the first week of the campaign is how quickly the present government parties have reverted to type, scared by the polls and the prospect that they now seem less likely to get back into power.

The Fiscal Advisory Council, the IMF and the EU have all been advising Ireland that instead of staring into Fiscal Space and making wild promises of extra spending and tax cuts, what we should be doing is committing to use any extra money we might have in the next few years to reduce the debt overhang.

That would be much more sensible than making promises of billions in extra spending that might have to be reversed if outside factors go against us. But sense is always in short supply here at election time.