Booth Prof. and Other Top Economists Say Scottish Independence Means Instability

A survey of world’s leading business school professors, including Anil Kashyap from the Booth School of Business, suggests Scotland would suffer ‘extreme economic pain’ in the event of a ‘yes’ vote.

Economists have considered the macroeconomic consequences of a Scottish secession. The group almost unanimously agreed that a sovereign Scotland would be susceptible to instability for years to come.

“Splitting equals extreme economic pain,” said Kashyap, believing that policy uncertainty comes with a price and the threat of secession is the ultimate uncertainty. Between budget concerns and monetary challenges, Scotland and England, Wales, and Northern Ireland are “better together,” he said.

In the survey, carried out by Booth’s IGM Forum, 62 percent of respondents agreed that “one consequence of separating from the rest of the U.K. would be greater macroeconomic instability for Scotland for many years.” Additionally, 5 percent strongly agreed.

“Pegging the Scottish to the English pound might essentially replicate the current state of affairs,” said Larry Samuelson of Yale. Meanwhile.

Oliver Hart of Harvard said that once the issues of currency and position within Europe are resolved, “things may be OK,” but held that a Scottish pound as a “bad idea.”

Only Robert Hall of Stanford disagreed with the majority, giving this perplexing comment with his disagreement: “Small English-speaking countries have excellent records” for macroeconomic stability, he said.

Alberto Alesina of Harvard said perhaps the most poignant comment of the panel, saying that to some scots “instability may be a price worth paying for independence.”

regions: Chicago

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