Newswise — The realities of a Scottish secession are anything but simple. Top economists from the world’s leading business schools considered the macroeconomic consequences of a breakup—and overwhelmingly agreed that a sovereign Scotland would be susceptible to instability for years to come.

Policy uncertainty comes with a price, and the threat of secession is the ultimate uncertainty.

“Splitting equals extreme economic pain,” said Anil Kashyap of the University of Chicago Booth School of Business. Between budget concerns and monetary challenges, Scotland and England, Wales, and Northern Ireland are “better together,” he said.

In the survey, carried out by Chicago Booth’s IGM Forum, 62% of respondents agreed that “one consequence of separating from the rest of the UK would be greater macroeconomic instability for Scotland for many years”, while 5% strongly agreed.Others panelists thought the upshot less clear: “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 maintained that once the issues of currency and position within Europe are resolved, “things may be OK” (but firmly classified a Scottish pound as a “bad idea”).The lone dissenter, Robert Hall of Stanford, gave this enigmatic comment with his disagreement: “Small English-speaking countries have excellent records” for macroeconomic stability, he said.

Of course, to many Scots, said Alberto Alesina of Harvard, “instability may be a price worth paying for independence.”

ParticipantUniversityVoteConfidenceCommentBio/Vote History
Acemoglu
Daron Acemoglu
MITAgree5
Bio/Vote History
     
Alesina
Alberto Alesina
HarvardAgree8
more instabilty may be a price worth paying for independence
Bio/Vote History
     
Altonji
Joseph Altonji
YaleAgree4
Bio/Vote History
     
Auerbach
Alan Auerbach
BerkeleyAgree7
Bio/Vote History
     
Autor
David Autor
MITAgree5
Bio/Vote History
     
Baicker
Katherine Baicker
HarvardAgree2
Bio/Vote History
     
Banerjee
Abhijit Banerjee
MITUncertain7
It depends on the exact institutional details of the separation.
Bio/Vote History
     
Bertrand
Marianne Bertrand
ChicagoAgree5
Bio/Vote History
     
Brunnermeier
Markus Brunnermeier
PrincetonAgree5
Bio/Vote History
     
Chetty
Raj Chetty
HarvardNo Opinion
Bio/Vote History
     
Chevalier
Judith Chevalier
YaleAgree8
Bio/Vote History
     
Currie
Janet Currie
PrincetonDid Not Answer
Bio/Vote History
     
Cutler
David Cutler
HarvardAgree2
Bio/Vote History
     
Deaton
Angus Deaton
PrincetonStrongly Agree 9
Bio/Vote History
     
Duffie
Darrell Duffie
StanfordAgree8
Yes, but greater long-run macro instability could be merely due, as for many small countries, to less size-related diversification.
Bio/Vote History
     
Edlin
Aaron Edlin
BerkeleyNo Opinion
Bio/Vote History
     
Eichengreen
Barry Eichengreen
BerkeleyAgree5
Many reasons to be uncertain, but lack of established CB institutions and the drawbacks of the euro & sterilization are reasons to agree.
Bio/Vote History
     
Einav
Liran Einav
StanfordNo Opinion
Bio/Vote History
     
Fair
Ray Fair
YaleUncertain5
Bio/Vote History
     
Finkelstein
Amy Finkelstein
MITAgree4
Bio/Vote History
     
Goldberg
Pinelopi Goldberg
YaleNo Opinion
Bio/Vote History
     
Goolsbee
Austan Goolsbee
ChicagoUncertain6
no one knows
Bio/Vote History
     
Greenstone
Michael Greenstone
MITAgree2
Bio/Vote History
     
Hall
Robert Hall
StanfordDisagree7
Small English-speaking countries have excellent records for macro stability.
Bio/Vote History
     
Hart
Oliver Hart
HarvardAgree7
The main uncertainty concerns whether Scotland retains the pound (bad idea) and stays in Europe( good idea). Once resolved things may be OK.
Bio/Vote History
     
Holmström
Bengt Holmström
MITAgree6
Bio/Vote History
     
Hoxby
Caroline Hoxby
StanfordUncertain10
We should be uncertain. Short-term uncertainty would be high, yes, but "many years" depend on choosing sound policies for real growth.
Bio/Vote History
     
Hoynes
Hilary Hoynes
BerkeleyAgree8
Similar case as the EU. Shared currency is a constraint.
Bio/Vote History
     
Judd
Kenneth Judd
StanfordAgree4
One major challenge would be how to handle the volatility in oil revenues.
Bio/Vote History
     
Kaplan
Steven Kaplan
ChicagoUncertain3
Instability high initially, but could force left-leaning government to govern more effectively. In medium run, may be better for Scotland.
Bio/Vote History
     
Kashyap
Anil Kashyap
ChicagoStrongly Agree 9
Splitting = extreme economic pain: sharp budget adjustment needed, big monetary challenges, big financial risks, they're "better together".
Bio/Vote History
     
Klenow
Pete Klenow
StanfordUncertain3
Bio/Vote History
     
Levin
Jonathan Levin
StanfordAgree2
Bio/Vote History
     
Maskin
Eric Maskin
HarvardAgree5
Bio/Vote History
     
Nordhaus
William Nordhaus
YaleAgree8
Bio/Vote History
     
Saez
Emmanuel Saez
BerkeleyAgree7
Bio/Vote History
     
Samuelson
Larry Samuelson
YaleUncertain1
This is unclear - pegging the Scottish to the English pound might essentially replicate the current state of affairs.
Bio/Vote History
     
Scheinkman
José Scheinkman
PrincetonUncertain7
Macro instability will result if announced policies (currency board, nationalizations) are followed.
Bio/Vote History
     
Schmalensee
Richard Schmalensee
MITNo Opinion
Scotland would be poor when their oil runs out in a few years, but stability would seem to depend on currency, EU, other uncertainties.
Bio/Vote History
     
Shapiro
Carl Shapiro
BerkeleyAgree3
Bio/Vote History
     
Shimer
Robert Shimer
ChicagoAgree3
Change creates the potential for instability, but a floating currency with good governance could be stabilizing
Bio/Vote History
     
Stokey
Nancy Stokey
ChicagoUncertain4
Not obvious why fluctuations would be greater. It depends also on what happens to the currency and what happens with the EU.
Bio/Vote History
     
Thaler
Richard Thaler
ChicagoAgree1
I suppose this is right, but there is some much uncertainty about how things would play out that I have no confidence in any predictions.
Bio/Vote History
     
Udry
Christopher Udry
YaleUncertain4
Bio/Vote History
     

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Contact: Anil Kashyap is available for further comment at [email protected].

Press contact: Neil Atherton at Noir sur BlancTel. +33 (0)1 41 43 72 83 / E-mail: [email protected]