Politicians have been warned that Ireland runs the risk of austerity-era spending cuts if it continues with existing expenditure plans.
Stephen Kinsella, Associate Professor of Economics at University of Limerick, addressed the Oireachtas Budget Oversight Committee on the same day as the Government publishes its Summer Economic Statement.
In his opening remarks, Dr Kinsella called on politicians to introduce fiscal stress testing to the public finances because of the volatility of certain tax heads.
He told TDs and senators that: "Ireland risks replaying the 2007-9 period of dramatic cuts to public expenditure on its current forecasted path of spending increases."
Dr Kinsella called on politicians to introduce automatic rules that would set "ceilings and floors" on spending to deal with increased volatility.
He said the "time to implement this methodology is now when the State's finances are strong".
Ireland needs a more robust fiscal system to withstand economic shocks, Dr Kinsella said.
This system should comprise a medium-term strategic arm, an accounting and verification arm, and the annual budget cycle.
"One key tool in discovering where we are weak is the fiscal stress test."
Such tests examine the effect of spending increases at the same time as drops in tax revenue and calculate the additional amount the State will have to borrow.
Dr Kinsella also told the committee that the volatility of corporation tax posed a risk to the economy, even if it increases.
He said "everyone and their cat" has been highlighting the volatility of corporation tax.
"The problem is it's been highly volatile upward, it's been growing and growing and growing. As the rate of taxes have come, the rate of expenditure had come up to match it," he said.
Dr Kinsella said that Ireland's bail-out was the fourth largest of any kind, anywhere in the world.
"I want us to understand that this is the scale of the crisis we are trying to avoid," he told the committee.
Meanwhile, economist Colm McCarthy has warned the Government against a giveaway Budget, saying there should be "no sweets, no gifts for everyone in the audience as in the last three budgets".
Speaking at the same Oireachtas committee, he said that even a soft Brexit would be negative for Ireland.
Mr McCarthy also warned that there would be a public finance crisis at some stage over the next number of years, as "there always is".
"The point about recoveries is they end. You can only recover once. If you start off with 16% unemployment which we did, and it gets down to 4%, 4.5% where it is now, you can't repeat that.
"You cannot use that spare capacity in the economy more than once and there are already labour shortages in many sectors," Mr McCarthy said.
He also said that because Ireland is a heavily indebted country, the Irish economy is vulnerable if there is a slow down internationally.
Mr McCarthy said the Fiscal Council was not aware of the overshoot in the health budget when it issued its recent report.
"I think it's unfortunate the figures in the SPU had to be described the Fiscal Council as not credible," he said.
He also said they raised the question of the payment of the annual Christmas Social Welfare bonus. "Some things are unpredictable, but Christmas is not one of them," he said.
Mr McCarthy also queried the incentivising of electric cars, warning that if a Benefit in Kind (BIK) was introduced, it would have to be withdrawn as it could end up being oversubscribed.
"We may have to look at congestion charges," Mr McCarthy said.
Dr Kinsella told the committee "the idea of fiscal space as a notion" was a "nonsense".
"It's a nonsense, a billion quid gets found at the back of the couch... if you want to compute these things, you have to assess the level of credibility of the budget envelope," he said.
Additional reporting David Murphy