diversifying external linkages the exercise of irish economic sovereignty in long term perspective political independence is usually associated with an attempt to reduce economic dependency on the former dominant or colonial power for most of the early period since irish independence the attempt to reduce exposure to the uk was implemented through tariff protection and restrictions on foreign ownership inward orientation eventually ran out of steam culminating in sustained emigration and deep recession in the 1950s the genesis in the mid 1950s of ireland s low corporation tax regime facilitated later trade liberalization and diversified the economy away from the uk these developments facilitated the full convergence on uk and broader western european living standards that was eventually achieved in the 1990s from 1979 the uk would diverge from most of the rest of western europe on exchange rate policy and ireland was forced to choose between the two the resulting difficulties can be ascribed to design flaws in the european monetary project and ireland s failure to recognize the constraints that the new regime imposed

pillage and property this paper introduces a class of coalitional games called pillage games as a model of hobbesian anarchy any coalition can pillage costlessly and with certainty any less powerful coalition power is endogenous so a pillage game does not have a characteristic function but pillage provides a domination concept that defines a stable set which represents an endogenous balance of power every stable set contains only finitely many allocations and can be represented as a farsighted core additional results are obtained for particular games including the game in which the power of each coalition is determined by its total wealth

to float or to fix evidence on the impact of exchange rate regimes on growth we study the relationship between exchange rate regimes and economic growth for a sample of 183 countries over the post bretton woods period using a new de facto classification of regimes based on the actual behavior of the relevant macroeconomic variables in contrast with previous studies we find that for developing countries less flexible exchange rate regimes are associated with slower growth as well as with greater output volatility for industrial countries regimes do not appear to have any significant impact on growth the results are robust to endogeneity corrections and a number of alternative specifications borrowed from the growth literature

estimating the impact of currency unions on trade solving the glick and rose puzzle does leaving a currency union reduce international trade this paper uses a historical approach to re examine the puzzling large apparent impact of currency unions on trade i find that the early time series estimates were driven by the gradual decaying of colonial trade ties and other major geopolitical factors including warfare communist takeovers and ethnic cleansing episodes my methodology which carries lessons for other uses of gravity equations in policy analysis yields point estimates of currency unions on trade that are not statistically distinct from zero

bilateral trade and the eurozone evidence from new member countries the question of whether and how much currency unions increase bilateral trade among their members has garnered much attention since rose s seminal article the answer is as pertinent now as ever for both the eurozone s existing and future members as the financial crisis shook the very foundations of the european monetary union emu and brought its shortcomings into the spotlight this paper analyses the issue using the gravity equation with country pair and time fixed effects for a sample of the four new members of the emu slovakia slovenia malta and cyprus which has to the author s knowledge not been studied thus far due to their recent joining and controls drawn from the european union this paper finds a positive relationship between joining the emu and trade with emu partners but not with non emu partners

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

assets and liabilities and scottish independence scottish independence implies an economic future that is different from remaining in the united kingdom the economic debate largely comes down to whether this would leave scots better or worse off by most measures scotland s current economic standing is very similar to that of an average uk region output per head income and unemployment are almost all exactly the same as the average uk region this is not surprising given the economic and social integration and shared institutions and is consistent with the idea of conditional convergence this suggests that after controlling for differences in institutions and other characteristics so called initial conditions countries tend to converge to similar levels of income 1 however if scotland becomes an independent nation some of the shared uk assets liabilities and institutions would need to be divided up this would change the initial conditions for scotland and the rest of the uk and therefore we would be likely to see a different economic future for both regions see barro and sala i martin 1991

some economic dimensions of the sovereignty debate in quebec debt gdp and migration this paper shows that the quest for sovereignty in quebec is explained by its role as the abode for a french speaking minority in north america it notes that there was no commonly agreed legal framework for the 1980 or 1995 referendums and that the attempt to impose one in 2000 has been rejected by quebec using results from existing papers and original research the paper shows that the quest for sovereignty can have an impact on the cost of financing the public debt of the entity doing this it also shows that labour flows can be affected by the existence of a sovereignty movement this gdp would be higher if the secessionist threat had not had an impact on the size of the labour force since the early 1970s

farsighted coalitional stability abstract i define the largest consistent set a solution concept which applies to situations in which coalitions freely form but cannot make binding contracts act publicly and are fully farsighted in that a coalition considers the possibility that once it acts another coalition might react a third coalition might in turn react and so on without limit i establish weak nonemptiness conditions and apply it to strategic and coalitional form games and majority rule voting i argue that it improves on the von neumann morgenstern stable set as it is usually defined but is consistent with a generalization of the stable set as in the theory of social situations journal of economic literature classification numbers c70 c71

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

financial integration gdp correlation and the endogeneity of optimum currency areas the paper analyses the relationship between trade financial integration and business cycle synchronization in the euro area the introduction of the euro has had a noticeable impact on european financial markets evidence that capital market integration exerts a positive effect on output correlation has two major implications first it corroborates the hypothesis of the endogeneity of optimum currency areas whereby after joining a monetary union countries better meet standard oca criteria second it provides european policy makers with yet another reason to pursue financial integration in the euro area and in prospective members as well

games of monetary and fiscal interactions in the emu abstract this paper constructs various models of the emu and ecb when member countries have different objectives voting in pursuit of national interest can yield moderate and stable inflation the metaphor of walsh type contracts implements a monetary policy rule that averages the member countries most preferred rules in a repeated relationship where a country suffering a large adverse shock can use political bargaining to subvert the ecb s commitment the optimal rule should incorporate some flexibility to forestall that finally freedom of national fiscal policies undermines the ecb s monetary commitment this may justify fiscal constraints like the stability and growth pact

transition costs in secessions with a brief application to scotland this article demonstrates that the costs incurred in the process of a region becoming a sovereign state can be large enough to outweigh the long term material benefits of independence transition costs consist of transaction costs fiscal costs and the cost of uncertainty their size depends crucially on whether the politics of the transition are cooperative game theory however shows that there are incentives for threats of non cooperation and for the exercise of such threats these considerations are applied briefly to the debate about scottish independence this includes a short analysis of how transition costs can be reduced a final section inquires about possible transition benefits which can consist of solidarity

identity and the economics of organizations on plebes first day at west point called r day they strip down to their underwear their hair is cut off they are put in uniform they then must address an older cadet with the proper salute and with the statement sir new cadet doe reports to the cadet in the red sash for the first time as ordered plebes must stand and salute and repeat and stand and salute and repeat until they get it exactly right all the while being reprimanded for every tiny mistake in the summary of david lipsky 2003 pp 145 154 who spent four years tracking a company of cadets at west point on r day you surrender your old self in stages but r day is just the beginning of the training and personal re engineering that is to come so that west point graduates emerge four years later as loyal officers in the u s army lipsky shows that despite some failure this tough program is remarkably successful in creating officers with the will to lead in battle economists current picture of organizations and work incentives has no place for the west point program and the motivations it seeks to inculcate in recruits in a standard economic model an individual s preferences are fixed and utility depends only on pecuniary variables the army s aim at west point is to change cadets preferences they wish to inculcate non economic motives in the cadets so that they have the same goals as the u s army alternatively stated the goal of west point is to change the identity of the cadets so they will think of themselves above all else as officers in the u s army they will feel bad about themselves they will lose utility if they fall short of the ideals of such an officer this change in identity

endogenous oca analysis and the early euro experience some have argued that the endogenous responses to the formation of a currency area are so strong that one need not worry about optimum currency area conditions ex ante we argue that this is much too strong a conclusion we draw on a number of recent studies to evaluate the endogeneity experiences of the eurozone in three major areas trade flows business cycle synchronisation and structural reforms to improve labour and product market flexibility simple before and after comparisons are insufficient for analysis of endogeneity the experiences of non euro western european economies suggest that broader trends also had considerable influence on trade and business cycle patterns while trade rose substantially within the eurozone it also rose with and among other european economies we argue that political economy considerations tend to dampen the magnitude of endogeneity efforts on structural reforms and that meeting conditions for entry may be a more powerful mechanism in this than are subsequent endogenous responses we also discuss a number of areas for further research

workers of the world unite franchise extensions and the threat of revolution in europe 1820 1938 abstract we test the hypothesis that the extension of the voting franchise in europe was related to the threat of revolution we contend that international diffusion of regime contention and information about revolutionary events happening in neighboring countries generate the necessary variation in the perceived threat of revolution using two samples of european countries covering the period from 1820 to 1938 we find robust evidence which is consistent with the threat of revolution hypothesis we also find some evidence that war triggered suffrage reform

trade creation and diversion revisited accounting for model uncertainty and natural trading partner effects summary the effect of preferential trade agreements ptas on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical pta literature the existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the correct set of explanatory variables that ought to be included in the analysis to account for the model uncertainty that surrounds the validity of the competing pta theories we introduce bayesian model averaging bma to the pta literature statistical theory shows that bma successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error and by generating predictive distributions with optimal predictive performance once model uncertainty is addressed as part of the empirical strategy we find strong evidence of trade creation trade diversion and open bloc effects our results are robust to a range of alternative empirical specifications proposed by the recent pta literature copyright 2010 john wiley sons ltd

coalitional bargaining in networks we analyze a noncooperative bargaining game with a general coalition structure in each period an opportunity for a feasible coalition to form arises according to a stochastic process and a randomly selected agent in the coalition makes a take it or leave it offer to the other agents in the coalition we develop a new technique based on convex programming to characterize the unique stationary equilibrium payoff of the game we apply the framework to various settings including trading networks with middlemen and cooperation networks with overlapping communities in these applications feasible coalitions are determined by an underlying network structure we study the effect of the underlying network on the pattern of trade and show how an agent s payoff is related to her position in the network

one money one market the effect of common currencies on trade currency unions their dramatic effect on international trade a gravity model is used to assess the separate effects of exchange rate volatility and currency unions on international trade the panel data bilateral observations for five years during 1970 90 covering 186 countries includes 300 observations in which both countries use the same currency i find a large positive effect of a currency union on international trade and a small negative effect of exchange rate volatility even after controlling for a host of features including the endogenous nature of the exchange rate regime these effects statistically significant imply that two countries sharing the same currency trade three times as much as they would with different currencies currency unions like the european emu may thus lead to a large increase in international trade with all that that entails andrew rose

catalonia and spain at the crossroads financial and economic aspects in some large european countries in recent decades economic globalization has gone hand in hand with a powerful trend to political decentralization this has been the case in the united kingdom france italy and spain in spain and after years of apparent stability the relations between catalonia and spain are experiencing troubled times this paper examines particularly the main economic effects of both the staying together and the secession scenarios following the introduction the second section reviews some aspects of the relations between catalonia and spain the third and fourth sections analyse different scenarios with a particular focus on the main issues that the secession scenario raises the fifth section contains a concluding remark

labour migration policy and constitutional change in scotland scotland is holding a referendum on independence in 2014 which implies that the scottish government would become responsible for migration policy in the event of a yes vote control over labour migration could be a vital policy tool for the scottish government influencing long run economic growth rates and demographic change this paper explores migration policy in the context of alternative constitutional outcomes for scotland it asks what scope a small economy that is intimately linked to a neighbouring larger economy has in shaping immigration policy it finds that the level of international migration to scotland is relatively low and that there are some significant differences in migrant characteristics compared to the rest of the uk ruk it also considers the political economy aspects of labour immigration through analysis of recent survey data whatever the outcome of the referendum we would argue that scotland would benefit from a more nuanced approach to immigration policies rather than the current one size fits all uk wide model

the coalitional nash bargaining solution the coalitional nash bargaining solution is defined to be the core allocation for which the product of players payoffs is maximal we consider a non cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period the grand team consisting of all players generates the largest surplus but a smaller team may form we show that as players get more patient if an efficient and stationary equilibrium exists it must deliver payoffs that correspond to the coalitional nash bargaining solution we also characterize when an efficient and stationary equilibrium exists which requires conditions that go beyond the nonemptiness of the core

long run growth and volatility which source really matters the aim of the article is to analyse the relationship between long run growth and business cycle volatility in particular the main purpose of this article is to identify which source of volatility is most detrimental to growth using cross country data from 1970 to 2000 and several indicators of volatility such as inflation exchange rate government expenditure output and investment volatility this article shows that although all these measures of volatility are remarkably harmful for growth business cycle investment volatility is the main source that hampers long run growth this relation is robust to different measures of business cycle and to different sub samples of countries

rational expectations and the effectiveness of monetary policy with special reference to the barro fischer model abstract monetary policy is sometimes alleged to be ineffective when the rational expectations hypothesis is imposed on macroeconomic models barro and fischer 1976 once presented in this journal a simple macroeconomic model in order to explain such a claim however their conclusion depends on a specific rule employed for the future course of money supply it is shown that their model embodies an important factor which generally renders monetary policies effective rational expectations notwithstanding it is suggested that this property also holds in more general macroeconomic frameworks

taxing an independent scotland if scotland were to become independent it would gain considerably more control over its tax system than it currently enjoys in this paper we consider the consequences of independence for the optimal design of a new scottish tax system an analysis which would also be of some relevance for considering the consequences for tax design of independence of other smaller nations scotland is different from the rest of the uk in some ways that are important for tax system design incomes are more equally distributed for example that is one reason why the progressive income tax currently raises less per head in scotland than in the rest of the uk it also suggests that there is less to be gained in terms of redistribution from sharply progressive taxation independence would create additional complexity for individuals and firms working or trading across borders it could also put downward pressure on tax rates and our analysis suggests that optimal tax rates in an independent scotland are likely to be lower than optimal rates in the uk as a whole at the same time the context of a substan tial budget deficit will continue to put upward pressure on tax rates

are reserve requirements relevant for economic stabilization abstract the level of the required reserve ratio and the payment of interest on required reserves are irrelevant for economic stability 1 when the central bank appropriately adjusts its interest elasticity of supply of reserves or currency to offset changes in the required reserve ratio or in the interest rate paid on required reserves or 2 when economic agents form their price level expectations rationally conditional on the current interest rate

vertical fiscal externalities in a federation abstract we examine vertical fiscal externalities in a model where a state government provides a productivity enhancing public input and both the state and the central government tax wages and profits previous literature has emphasized the negative tax externality that occurs when two levels of government impose distortionary taxes on the same tax base we show that an increase in the state government s tax rate on wage income can increase federal revenues if the federal government imposes an ad valorem tax on employees wages and the demand for labour is inelastic we also show that an increase in the provision of the public input can either increase or reduce federal tax revenues leading to either under or over provision of the public input by the state government

distance language religion and the law of one price evidence from canada and nigeria we examine the impact of physical distance language and religion on law of one price lop deviations across interwar canadian and modern nigerian cities the data comprise monthly average retail prices for narrowly defined goods collected by national statistical agencies we find that differences in the fraction of the city population sharing a common language and religion have a significant impact on lop deviations the impact of language differences is consistent with a recently developed theory in which both trade costs and differences in signal noise ratios contribute to lop deviations

exchange rate regimes and international trade evidence from the classical gold standard era in this paper we show that the spread of the classical gold standard in the late nineteenth century increased international trade flows this positive effect was compounded whenever a group of countries formed a monetary union applying the gravity model of trade to more than 1 100 country pairs during the 1870 1910 period we find that two countries on gold would trade 60 percent more with each other than with countries on a different monetary standard moreover a monetary union would more than double bilateral trade flows our findings are relevant for current discussions on alternative monetary arrangements for the twenty first century

history expectations and leadership in the evolution of social norms we study the evolution of a social norm of cooperation in a dynamic environment each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game social norms emerge as patterns of behaviour that are stable in part due to agents interpretations of private information about the past influenced by occasional commonly observed past behaviours for sufficiently backward looking societies history completely drives equilibrium play leading to a social norm of high or low cooperation in more forward looking societies there is a pattern of reversion whereby play starting with high low cooperation reverts towards lower higher cooperation the impact of history can be countered by occasional prominent agents whose actions are visible by all future agents and who can leverage their greater visibility to influence expectations of future agents and overturn social norms of low cooperation

scotland and small country independence the assessment this paper reviews some of the issues consequent on the formation of new states through secession while its particular focus relates to the potential withdrawal of scotland from the united kingdom it discusses preference heterogeneity as a potential cause of the break up of states relating that to recent developments in the economics of identity it examines some macroeconomic issues particularly debt and currency and reflects on how these might influence secession it examines alternatives fiscal decentralization to secession and considers the strategies that those arguing for and against secession may deploy it also explains the structure of this issue explaining how the different contributions come together

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

the nonlinear impact of currency unions on bilateral trade abstract most gravity model specifications assume that a currency union varies the level of bilateral trade between members by a constant proportion we demonstrate that a common currency also alters the slope of the relationship between bilateral trade and member country gdps

is there an operational interest rate rule in his 1983 paper jeremy siegel derives a seemingly implementable policy rule involving optimal responses to interest rates the existence of such a rule would be of tremendous interest to central banks whose monetary policies place heavy weight on responses to interest rates the siegel rule is especially appealing because it is i an optimal combination policy in the sense of william poole 1970 and ii the proposed implementation of the rule does not require detailed knowledge of the structure of the economy all that is required is a calculation of the covariance between innovations in prices and interest rates within the confines of a rational expectations equilibrium model in which siegel assumes agents do not make use of information embodied in the current nominal interest rate he is able to design an optimal combination policy that does not require detailed information about the economy that such an optimal policy exists is not new but that it can be easily implemented is novel the policy rule depends solely on the covariance between innovations in the aggregate price level and innovations in the nominal rate of interest normalized by the variance of innovations in the interest rate when this index is zero policy has been set optimally when the index is positive the feedback term on interest rates in the money supply rule is too large and when the index is negative the feedback term is too small given that one can obtain reduced form expressions for prices and interest rates the index is easily computed unfortunately siegel s proposal violates robert lucas s 1976 critique that is he implicitly treats as invariant certain aspects of economic behavior that will generally change when one moves to an operational interest rate rule this note shows in detail that in a model where prices are flexible and agents observe local market prices i e the model at least employed verbally by siegel that the coefficients in the aggregate supply and demand functions are not invariant to the form of the money supply rule this lack of invariance will cause siegel s rule to be nonoperational the sensitivity of parameters in aggregate supply functions to policy is not restricted to equilibrium models with flexible prices this property also extends to contracting models with endogenous indexing see for example jo anna gray 1976 therefore siegel s rule will not be implementable in a wide variety of commonly used macro models

monetary policy and the information content of prices rational expectations and cleared markets lead to the proposition that feedback monetary policy is irrelevant to real activity as in the analyses of sargent and wallace however if agents are differentially informed and have access to a common price then prospective monetary policy actions future feedback to imperfectly known current circumstances can alter real activity by changing the information content of prices

the energy sector in scotland s future the energy sector accounts for 15 20 per cent of scottish gdp it is highly capital intensive and maintaining production especially of oil and gas will absorb a large share of business investment over the next 5 10 years the volatility of revenues from the sector means that an independent scotland will face much greater difficulties in macro economic management than as part of the uk attempting to fix its exchange rate either to the pound sterling or the euro without a system of compensating fiscal transfers will put the burden of adjustment on factor mobility and incomes scotland could use a sovereign wealth fund as a stabilizing instrument but it is starting from a much worse position than norway and would need to reduce current government spending to build up the fund the prospects for exporting gas and electricity to the rest of the uk depend upon the terms of access to markets it seems unlikely that integrated great britain markets will survive in their current form large exports will continue but the net terms of trade will probably be less favourable to scotland than at present

trade costs 1870 2000 what has driven trade booms and trade busts in the past century and a half was it changes in global output or in the costs of international trade to address this question we derive a micro founded measure of aggregate bilateral trade costs based on a standard model of trade in differentiated goods these trade costs gauge the difference between observed bilateral trade and frictionless trade in terms of an implied markup on retail prices of foreign goods thus we are able to estimate the combined magnitude of tariffs transportation costs and all other macroeconomic frictions that impede interna tional trade but that are inherently difficult to observe we use this measure to examine the growth of global trade between 1870 and 1913 its retreat from 1921 to 1939 and its subsequent rise from 1950 to 2000 we find that trade cost declines explain roughly 55 percent of the pre world war i trade boom and 33 percent of the post world war ii trade boom while a precipi tous rise in trade costs explains the entire inter

a noncooperative theory of coalitional bargaining the authors explore a sequential offers model of n person coalitional bargaining with transferable utility and with time discounting their focus is on the efficiency properties of stationary equilibria of strictly superadditive games when the discount factor delta is sufficiently large it is shown that delay and the formation of inefficient subcoalitions can occur in equilibrium the latter for some or all orders of proposer however efficient stationary equilibrium payoffs converge to a point in the core as delta approaches one strict convexity is a sufficient condition for there to exist an efficient stationary equilibrium payoff vector for sufficiently high delta

economic aspects of constitutional change the case of belgium is belgium threatened by secession in this article we highlight why belgium is unlikely to experience the secession of flanders and investigate belgium s journey to federalism we first call upon tools provided by economic theory then we turn to facts first having a look at belgium s history and second presenting the six reforms of the state which occurred between 1970 and 2013 progressively increasing the autonomy of belgian regions and communities and making belgian federalism an evolutionary maybe endless repeated game whose players have different strategies an offensive one for the north and a conservative one for the south then we examine the contemporary dangers and discuss the outcome of belgian game from the point of view of fiscal federalism and subsidiarity

vertical externalities in tax setting evidence from gasoline and cigarettes abstract a common feature of federal systems is that tax bases are joint property consequently state and federal tax setting decisions are interdependent our aim here is to put forward a rudimentary theoretical analysis of this phenomenon and to use the theory as a framework for econometrically estimating the magnitude of the responses we find that when the federal government increases taxes there is a significant positive response of state taxes for example a 10 cent per gallon increase in the federal tax rate on gasoline leads to a 3 2 cent increase in the state tax rate

coalition bargaining in repeated games we consider an intertemporal game theoretic framework in which different coalitions interact repeatedly over time both the terms of trade and the endogenous cooperation structure arising in this setup are characterized in a protocol free manner provided that just three natural conditions on the outcome are satisfied c1 a coalition is formed with positive probability if and only if the shares obtained in this case by its members weakly exceed their respective share expectations c2 each matched coalition distributes the entire surplus among its members c3 members of any coalition are treated symmetrically with respect to their share expectations when the surplus of this coalition is distributed our analysis primarily focuses on the limit scenario where the game ends each date with vanishing probability we show that in this case the cooperation structure and the shares are unique in an application to trade networks we show that in a complete network a unique price arises and agents specialize in either buying or selling in an incomplete network on the other hand transactions occur generally at multiple prices and some agents become arbitrageurs that buy and sell at different prices

constitutional change and inequality in scotland what scope does a sub national economy have to affect the level of inequality does a policy menu consistent with the theories of fiscal federalism provide for an ability to affect inequality measures or does this ability require the powers of a nation state in this paper we discuss these questions in the context of the debate around the scottish independence referendum in which inequality has played a prominent role and ask whether independence further devolution or simply different policies under the current constitutional framework are capable of helping scotland make the transition to a less unequal income distribution we provide a series of estimates of the impact of different policy choices upon inequality in scotland and discuss inequality reduction in the context of different constitutional options

the myth of decoupling the decoupling hypothesis is the idea that business cycles in emerging market economies have become more independent from business cycles in advanced economies in recent years decoupling essentially amounts to a structural break in the degree of business cycle interdependence between the two groups of economies and it can be tested as such we develop an innovative measure of business cycle interdependence based on the euclidean distance available at the annual frequency which allows for a proper test for a structural break in a graphical setup we also make use of a standard econometric test both approaches point to the same conclusion there has been no decoupling in recent years if anything the degree of business cycle interdependence has become stronger

disaggregated trade and disaggregated currency unions a ranking of common currency effects andrew rose has long argued that a common currency has a large effect on increasing trade recently rose has called into question the reliability of this conclusion as new techniques have emerged for estimating gravity equations this article uses the sector specific gravity model developed by anderson and yotov 2010a to investigate if disaggregated trade can provide a reliable estimate of a common currency s effect disaggregating trade alone is insufficient to obtain a reliable estimate of a currency union regardless of econometric technique when the effect of a common currency on trade is uniform across all unions disaggregating the universe of currency unions with individual effects provides a reliable ranking of currency unions independent of estimation method by the effect that each union s currency has on increasing trade these rankings differ across sectors

out in the cold iceland s trade performance outside the european union and european monetary union although entering currency and customs unions involve both costs and benefits an increasing body of research is finding that the benefits in terms of international trade creation are remarkably large focusing simply on the european monetary union emu rather than the broad range of currency unions studied by other authors we find that the trade impact of emu is smaller but still substantial our findings suggest that the iceland s trade could increase by about 60 and that the trade to gdp ratio could rise by 12 percentage points should iceland join the european union and emu copyright 2006 oxford university press