Will David Cameron’s Wikipedia entry be miserable in 2100?

Jan Zilinsky
Sep 17, 2014 · 7 min read

What do US-based academics think?

A panel of respected economists was asked whether it agreed with the following statement:

“Although there are many issues for Scotland’s voters to consider, one consequence of separating from the rest of the UK would be greater macroeconomic instability for Scotland for many years.”

62% of economists on the panel agreed:

The skeptics

  • Barry Eichengreen summed up his views as follows: “Many reasons to be uncertain, but lack of established CB [central banking] institutions and the drawbacks of the euro & sterilization are reasons to agree [that instability would increase].”
  • Anil Kashyap: “Splitting = extreme economic pain: sharp budget adjustment needed, big monetary challenges, big financial risks, they’re ‘better together’”
  • Oliver Hart’s response is closest to what I would have said: “The main uncertainty concerns whether Scotland retains the pound (bad idea) and stays in Europe (good idea). Once resolved things may be OK.”

Cautious optimists

  • Robert Shimer qualified his agreement with the statement: “Change creates the potential for instability, but a floating currency with good governance could be stabilizing”
  • Steven Kaplan: “Instability high initially, but could force left-leaning government to govern more effectively. In medium run, may be better for Scotland.”

Not a priori opposed to a separation

  • Abhijit Banerjee, who said he was uncertain, said: “It depends on the exact institutional details of the separation.”
  • Caroline Hoxby said it would come down to the policy trajectory: “Short-term uncertainty would be high, yes, but “many years” depend on choosing sound policies for real growth.”
  • Nancy Stokey: “Not obvious why fluctuations would be greater. It depends also on what happens to the currency and what happens with the EU.”

Sample bias?

It is not just the economists observing the issues from a safe distance — when asked “Do you agree that that Scotland would be better off in economic terms as an independent country?” the majority of the respondents in The Centre for Macroeconomics survey gave a negative answer.

Warning about a “yes” vote

Source: Mark Ian Harrop
  • Deutsche Bank chief economist David Folkerts-Landau called the desire for separation “incomprehensible” (full report). The report concludes that: “The economic and financial arguments against independence are overwhelming. … Scots have benefited from the sharing of fiscal and monetary risk. To end this relationship is simply a wrong turn.”
  • Then there’s Joseph McDonnell: “If Bank of England continues to support a Scottish Pound as lender of last resort then that is not independent” (source).
  • James Forsyth opines: “The Scots could vote to end the greatest, most successful union in human history next week”
  • Frances Coppola tweets:: “Scots are only EU members by virtue of being part of the UK. Leave the UK, you leave the EU. … temporarily, admittedly. Scotland has to apply for membership as a new state.” (here and here)
  • Adam Posen warns:

Speaking for independence

Joseph Stiglitz starts his op-ed by warning that the UK may end up leaving the European Union soon:

Deliberate economic pain?

While Stiglitz made the case that a separation can be good for the economy, others have speculated that many Scots may willingly give up some economic comfort in exchange for greater autonomy.

Are the economic costs actually known?

Wren-Lewis is concerned:

A non-economic perspective

From Nick Cohen:

People often vote “yes”

The Guardian published this remarkable chart. It shows that, in most cases, the margin of victory was large:

    Jan Zilinsky

    Written by

    political science & economics (sometimes with 19th century methods)

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