In 1974, Douglas Kennedy left New York to go to college in Dublin. Here the best-selling novelist looks back on a city he both loathed and loved, and reflects on Ireland's extraordinary rebirth as the Celtic Tiger
On my eighth day in Dublin, I walked into a local grocers and asked to be shown their selection of cheese. The grocer - an ageing man with a bulbous nose, dressed in a splattered white apron - pointed to a refrigerated glass-fronted display case. There - next to a pile of geriatric rashers and an equally elderly ham - were two large coloured blocks. They looked like they were made of Plasticine.

"What kind of cheese d'yuz want?" he asked, pointing to the pair of Lego- style cubes. "White or red?"

The year was 1974. I was 19 years old - a Manhattan boy who had never left the United States before, and had decided to spend his third year of university studying somewhere within these islands. Though my surname was supremely Irish-American, my family had always considered itself more German than Celtic - as my Jewish maternal grandparents were of Bavarian origin, while my Catholic paternal grandmother's family hailed from Hamburg. In short, my decision to come to Trinity College Dublin wasn't predicated on all the usual return to the olde sod sentimentality so beloved of Irish-Americans. Nor did I have any great faux-literary longings to commune with the land of Joyce, Yeats, Synge, etc. Rather, Trinity was the first place on this side of the water to accept me as a one-year student - and, quite simply, I decided to go there.

And so, on a bright September evening of that year I boarded an Aer Lingus 707 for the overnight transatlantic flight to Dublin via Shannon. At Dublin Airport, I took a taxi to the digs which Trinity's Warden of Residences had chosen for me.

They were in the home of a woman I'll call Mrs Costigan. She lived on Oswald Road, in a seaside district of Dublin called Sandymount. Besides wondering if the Warden of Residences enjoyed the sly irony of billeting a Kennedy on Oswald Road, my initial reaction to Mrs Costigan's residence was one of extreme culture shock. It was a small pebble-dashed terraced house. Mrs Costigan was the widow of a civil servant: a tiny grey-haired woman in her late sixties. Her home smelled of terminal mildew. Her walls were papered in fading floral patterns. Crucifixes and sacred-heart shrines were the decorative norms. My room had pictures of John XXIII and Paul VI on the walls. They were not autographed. There was a single bed, with thick blankets and flannel sheets. There was a dresser, lined with old pages of the Irish Independent. There was a rickety table and a bentwood chair. There was a double-bar electric heater. There was an Axminster carpet on the floor. It was, without question, the most depressing room I had ever seen.

Mrs Costigan offered me a cup of tea, then told me the rules of the house. My IRpounds 7 per week rent covered breakfast, but no evening meals. If I wanted Sunday dinner, that was an extra 75 pence, but for that I'd get a T-bone steak. My rent covered one bath per week. If I wanted additional baths, it would be 25 pence per soak - and I would have to have them after nine in the morning, as the immersion heater only came on at 7am, and it took a good two hours to heat the water properly.

At night, she wanted lights out by midnight ("The electricity's very dear, you know," she said). Visitors were fine ... but only in the downstairs parlour, and as long as they were gone by 7pm. I certainly didn't need to ask her about the rule for late-night women guests, as I instantly knew that I wouldn't be staying with Mrs Costigan for long.

I unpacked. I forked out 25 pence and had a bath. I dressed. I put on my trenchcoat (my favourite item of clothing back then - as I thought it endowed me with Bogart-esque cool ... whereas, actually, it made me look like a louche jerk). I left Mrs Costigan's and jumped on a bus in the direction of An Lar: City Centre. I sat on the upper deck of the bus, smoking nervously. The bus passed rows of drab houses. It careened past a bleak industrial landscape. It eventually deposited me on College Green.

I entered the front gate of Trinity College. I was immediately relieved. The photos I'd seen of the famed Front Square accurately mirrored the haughty grandeur of the college. But after exploring my academic home for the coming year, I ventured back out into Dublin again. And I was horrified.

Because, at first sight, the city was a dump: a mishmash of rundown Georgian architecture, late Sixties concrete brutalism and creeping dereliction. Yes, there were two nice Georgian squares. And yes, Grafton Street (the main shopping precinct south of the Liffey) had a certain provincial charm. But Christ! The place was so shabby.

I crossed the river and strolled up O'Connell Street. My spirits sank even lower. This wide thoroughfare was littered with rubbish, and tacky Wimpy-style restaurants, and grubby cinemas. Yes, there were one or two architectural highlights (the General Post Office, the Rotunda Hospital). By and large, however, the city's grand boulevard set a dilapidated tone which all of Dublin seemed to embrace.

I ate a soggy omelette and chips at a plastic cafe near O'Connell Bridge, then returned to the damp dreariness of Mrs Costigan's house. The formidable combination of jet-lag and fusty flannel sheets snapped me awake at 2am. I turned on the bedside light and started to read. Within five minutes, there was a knock at my door.

"You're to turn off the light now," Mrs Costigan said.

I started flat-hunting the next morning.

After several days of asking around Trinity, I ended up sharing a flat with a law student from Cork named Hugh O'Donoghue: a tall, gangly character, with a deeply acerbic sense of humour. His flat was on the Lower Rathmines Road. "It's a kip," he told me over the phone, "but it's only IRpounds 7 each a week."

O'Donoghue wasn't lying about the flat. It was truly austere. There were woodchip walls, painted anaemic yellow. Scuffed linoleum lined all the floors. There was a very basic kitchen, containing a gas ring and a tiny fridge (big enough for a pint of milk, a half-dozen eggs and little more). The bathroom had been badly whitewashed. There was a salmon pink bath and bog. Over the bath was an alarming hot water heater - something that looked like it dated from before the war. When I turned it on, it began to wheeze like an emphysemic.

"It's fucked," O'Donoghue explained, adding that it never produced more than a quarter-tub full of hot water.

Not surprisingly, the flat had no central heating - though there were electric bar heaters in every room. There was a coin-operated electricity meter, which devoured 10p pieces. There was a pay phone in the hall outside the flat: an elderly black box, which took 2p coins and required you to press Button A when your caller answered. And for company, there were three girls "from down the country" in the flat upstairs. O'Donoghue told me their names: "Attracta, Concepta, and Margaret-Therese." Then, his face still deadpan, he said: "Nuns-in-waiting."

I hated the flat; I liked O'Donoghue. I couldn't bear the thought of another night under the portraits of the Popes in Mrs Costigan's. I moved in.

With a week to go before the beginning of Michaelmas term, I began to explore Dublin in earnest. Having grown up in New York, I was used to the manic rhythms and ethnic complexity of a major world city. Being a city kid, I took such things as dim sum restaurants, repertory cinemas, great Jewish delis and pizza joints for granted. Dublin, however, wasn't just ethnically and ecclesiastically homogenous (why was the entire citizenry crossing themselves every time they passed a Catholic church?); it was also marooned in another decade when it came to food and popular culture. All the cinemas were showing last year's films. Egg mayonnaise, meat-and- two-veg, with sherry trifle for afters, was the gastronomic norm. The Angelus was blared twice a day on radio and television (just to remind everyone of the true power behind the secular state). And the perennial grey skies of early autumn bathed the city in perpetual gloom.

After my first fortnight, I took a bus down to the GPO and paid a pound for a three-minute call to New York.

"I'll stick it out for this term," I told my parents. "But then I'm coming back. I hate it here."

And, of course, I ended up living in Dublin for the next 14 years.

"How the hell can you stand it here?" a visiting American actor asked me in 1980. He was passing through Dublin for two weeks, performing with a company I had booked into The Peacock - the smaller auditorium of Ireland's National Theatre, The Abbey. I was The Peacock's administrator from 1978 to 1983, during which time I dealt with many visiting actors and directors. And, by and large, they all had a similar reaction to Dublin. At best, they found it amusing, libidinous fun for a couple of weeks. At worst, they considered it a total dump. Never once did I hear anyone say: "God, I envy you living here."

Nowadays, of course, Dublin has become a fashionable destination. Style magazines often feature the city in their glossy pages, as a place with an alleged hip cachet - the new La Boheme capital of the EU replete with trendy shops, a great music scene, plenty of partying, plenty of craic ... the perfect place for a twentysomething with creative pretensions to hole up in a garret and play-act the struggling young writer. Upmarket magazines now write long, conscientious essays of the city's vibrant life- of-the-mind: the fact that it is a place where words still count, where books are still read and ideas still have import. And the business pages of international newspapers frequently have stories these days about Ireland's current economic miracle (fashionably dubbed the Celtic Tiger), and the fact that Dublin property prices are now on par with those of London.

But just 10 years ago - when my wife and I jumped ship and moved to London - the Dublin we left behind was economically depressed, lacking in confidence and visually bleak. And indeed, whenever I now hear someone wax lyrical about Dublin's new-found groovy credentials, I feel like saying: But I remember when most visitors thought it was a hole.

Which, naturally enough, brings me back to the question posed to me by that American actor in 1980: if Dublin was such a kip, why did I live there for so long?

Like most things in life, happenstance had much to do with my 14-year stint there. I finished my year at Trinity. I returned to the States. I completed my degree. I spent several depressing months as a less-than- lowly-paid stage manager at a variety of Manhattan's off-off-Broadway theatres. One March day I got fed up with the New York theatre world - and withdrew the last $500 from my bank account in Manhattan. I bought a one-way ticket across the Atlantic. I landed back in Dublin, crashing on the floor of a friend's flat for several weeks. I started a little theatre company with an old Trinity acquaintance. Eighteen months later, The Abbey Theatre offered me a job administering The Peacock. In 1983 I quit The Peacock and set myself up in a small basement flat as a full- time writer (yes, I too was once a twentysomething with creative pretensions). I got married to a woman named Grace Carley in 1985 - a marketing executive with the then newly constituted Irish Film Board. We bought a house off Dublin's South Circular Road. Two years later, Charlie Haughey's government closed down the Film Board. Grace landed a job with a film company in London, so we moved across the pond, bringing my 14-year residency in Dublin to an end.

In short, I could argue that life's usual flukes kept me in Dublin for all that time. But that would be half-truth. Because there were several junctures during those years when I could have left. But, at heart, I liked the place. What I liked most (besides the very close friends I made there) - and what drove me back there in 1977 after my brief disastrous return to the States - was the fact that, back then, Dublin was the great Peter Pan city: a place where you really didn't have to grow up.

Consider: if you are raised in the American middle-classes (and especially on the island of Manhattan, where there is no such thing as lack of ambition), the verb to achieve is one of the mainstays of your vocabulary. As soon as you leave university, you are expected to get out there and make something of yourself, to settle down and become a good over-mortgaged member of society. Most tellingly, you have to be ambitious; to become that most prized of American species, a winner. Because (as my grandfather was fond of telling me), only the winner goes to dinner.

However, in Dublin, to openly portray yourself as a winner was to commit a major social felony ... and to invite ridicule. This is not to say that ambition didn't exist in that city. On the contrary, Dublin always struck me as a place with a considerable amount of ambition brimming below its indolent veneer - and a lot of serious work got done there. But the city had an unwritten social code, which could best be described as: never tell anyone how hard you are working ... and never - repeat, never - fall in love with the aroma of your own perfume.

And, of course, the other major credo of Dublin life was: never talk about money. Then again, money wasn't a subject that came up much in conversation ... because most people I knew had none. Those that did - doctors, solicitors, the occasional financial type - still weren't making anywhere near the sums that their counterparts in London or New York would command. This was especially true during the Eighties. While the City and Wall Street buzzed to the greed-is-good-for-you tune - and Yuppiedom arrived with a vengeance - Dublin did not partake in this mad avaricious dance. On the contrary, whenever I came back after a visit to London or Manhattan, what struck me most forcibly was the fact that the Roaring Eighties were making hardly any impact on Dublin. Property prices had remained stagnant, not to mention absurdly cheap (in 1986, IRpounds 75,000 would easily buy you a substantial Victorian house in the smart waterfront suburb of Monkstown). Though membership of the European Community had made a considerable impact in terms of the range and quality of produce on sale - and the shops and gradually improving restaurants were beginning to reflect contemporary style and fashion - the consumerist hum of the Reaganite/Thatcherite years wasn't heard in Dublin.

Or, to put it another way, you rarely saw a Porsche on the streets of Dublin. You rarely saw an Armani suit. Or a Cartier wristwatch. Or a bunch of drunken brokers buying a thousand quid bottle of Chateau Lafitte in some Michelin-hung eaterie to celebrate a big deal. Or any of the other attendant attributes of high-voltage mercantilism. Most professional people I knew lived on substantial overdrafts - and were crippled by a punitive tax rate (in 1983, my IRpounds 12,000 salary at The Abbey was taxed to the tune of 50 per cent). If you were a freelance actor, or struggling scribbler, Dublin was one of the few capital cities left in Western Europe in which you could have a reasonable existence for little money (a one-bedroom flat in a good central Dublin district would rent for anywhere from IRpounds 90 to IRpounds 200 a month in the mid-Eighties). During my first full-time year as a writer (1983 to 1984), I netted around IRpounds 3,500, and wanted for very little. Material considerations weren't paramount in most people's minds. Because the money simply wasn't there to indulge such acquisitive interests. And those who did have it kept pretty damn quiet about it.

Lack of money gave Dublin a certain egalitarian patina (even though, like everywhere else on the planet, there were the usual divisions between wealth and poverty: the educated and the underclass). Lack of money also meant that a time-is-money attitude didn't exist in the city - which in turn, meant that a lunch could often end at closing time. And when visitors passed through from England or the States, they would be amazed to discover that a dinner party would never break up until (at the very least) one in the morning ... and that was on a week night ("Don't these people have jobs?" a friend from Manhattan asked me after one such lengthy evening finally ended at three).

However, lack of money also meant that the architectural fabric of the city (once considered on a par with Bath for Georgian grandeur) had begun to erode - to the point where entire corners of Dublin (The Quays, Mountjoy Square) looked like testaments to urban dereliction. "Was Dublin bombed in the war?" my brother Bruce asked me when he first passed through the city in 1979, and cast his eye on boarded-up buildings and crumbling brickwork.

"No," I said, "but a lot of property developers have gone bust recently."

Lack of money also fuelled the city's favourite participatory sport: begrudgery. Though the English like to spout on about their hatred of success, and the Australians bemoan the way they cut each other down to size (the so-called Tall Poppy Syndrome), I would argue that when it comes to the dark verbal arts of backstabbing, bitchiness and wishing the other guy ill, Dublin has always been in a class of its own. And the depressed economic circumstances of the Eighties seemed to intensify this need to begrudge success, and delight in another person's failure.

A true story from that era. In 1986, my first (and only) stage play was produced at The Peacock. It received bad reviews. It did disastrous business (in fact, the theatre was so empty you could have landed a small Cessna in the stalls). It was taken off prematurely. Some months later, a new editor took charge of The Irish Times and dropped my weekly column. It was not a particularly happy time in my professional life - and I kept a very low profile around town. Until, one evening, I was meeting my wife for a drink before a film. The cinema was right near the offices of The Irish Times. As I made my way to the bar to order a round, I noticed a group of journalists seated at a nearby table. One of them caught my eye.

"How're you doin', Douglas?" he asked.

"Fine," I said and moved on, As soon as he thought I was out of earshot, he turned back to his colleagues and said: "The great fuckin' writer."

His comment was greeted with hoots of dark laughter ... and it was at that very juncture that I knew that maybe I should start thinking about living in a large, anonymous city.

As fate would have it, my wife's company was closed down two months later. We sold our house for a whopping IRpounds 33,000 (the same price we'd paid for it three years earlier), and landed ourselves in London. Had we held on to that house (in a marginal area of Dublin called Dolphin's Barn), we could now probably sell it for IRpounds 160,000 - as property prices in Dublin have jumped by anywhere up to 500 per cent in the last decade. A friend who bought a bungalow on Howth Head for IRpounds 60,000 in the mid-Eighties could now sell it for a cool million. New fashionable inner-city housing now dots the landscape. Mountjoy Square and The Quays are suddenly prime redevelopment sites. And Dublin's architectural fabric - once as decayed and corroded as Shane MacGowan's teeth - is currently under restoration.

More tellingly, money is now in evidence everywhere. New cars clog the streets. New restaurants are in abundance, and rocket-with-shaved-Parmesan is no longer considered a culinary "cargo cult". Shopping is now a leisure activity. New hotels keep opening. Business, in short, is booming - as Ireland (long regarded as the economic runt of the EU) continues to outpace the rest of the community in terms of economic growth. And the end of this Celtic Tiger boom is not yet in sight.

Granted, it is now difficult to be a struggling young anything in Dublin, especially as IRpounds 100,000 might just buy you a one-bedroom flat in a reasonably convenient corner of town. And, without question, the gap between the affluent and the indigent has dramatically widened. But I'm not going to be one of those dreary middle-aged sentimentalists who spout on about the rare ould times in Dublin when we were all broke (but God, could we talk till dawn!), when software only meant a pair of blue suede shoes, and when (so Irish-American myth went) the city had a certain earthy lyricism, and every second fella you met in the pub was a poet (whereas, in actuality, just about every drunken would-be writer I encountered was a bore, a gobshite ... or both).

Yes, I liked my years there. Yes, Dublin taught me a great deal - about resisting the temptations of self-importance, coping with failure and realising that, sometimes, the only answer in life is to get drunk. It helped make me a writer. And for that alone, I owe it big time.

But I never felt romantic about the place - perhaps one of the reasons why I lasted there so long. And I could not imagine hankering after the old shabby gentility of Dublin. Whenever I visit the city now, I basically like what I see. Dublin's new-found success and confidence suits the place. Of course, there are those who moan on about how the city has just become like anywhere else (yet another fashionable, flush corner of the European community). But they remind me of the kind of earnest folk who visited East Berlin in the bad old days (with a return air-ticket in their back pocket), and told the resident beleaguered intelligentsia: "That jacket you're wearing might be made from vinyl, but unlike us debased capitalists, you quote Goethe and Rilke to each other. So please, for our sakes, resist the temptations of the material. Please stay pure."

But nobody ever stays pure in Dublin. And despite the city's economic transformation, certain old civic habits die hard ... something I discovered recently when I returned for a weekend. I was meeting a friend and her husband in the bar of The Shelbourne Hotel, and predictably was running late. As I came charging into the hotel foyer, I was stopped by a guy I'd never met before. He introduced himself. He was a columnist for one of the local papers. I shook his hand and then said that I'd love to chat, but I was meeting people here, and had already kept them waiting for a quarter of an hour.

Saying goodbye, I headed to the bar and found my friends. A drink was pressed into my hand. We began to catch up on each other's news. Suddenly I felt a finger stab my shoulder. Turning around I saw the journalist with whom I'd just been chatting.

"I just want to tell you something," he said. "I always though you were fucking bollocks."

He spun on his heel and left. There was a shocked silence. Then my friend asked: "Who was that?"

I mentioned his name.

"Has he always hated you?" she asked.

"Don't ask me. I only met him two minutes ago."

My friend bit hard on her lip, doing her best to suppress a laugh. She failed. Then clinking her glass against mine, she said: "Welcome back".

Douglas Kennedy's novel `The Big Picture', was a bestseller in the US (and Ireland) and has been translated into 15 languages. His latest novel, `The Job', was published in August by Little, Brown.