Is The IFS Report Inconsistent With The “Scotland’s Future” White Paper?

This is blatant self-promotion...

Based on last month's post, White Paper Reflections - Budget, last week I spoke at a Scottish TUC conference. The STUC's Stephen Boyd has written a very generous description of my talk in his write up of the event, and my slides are available.

End November Links

# The LSE blog had a great post, Britain’s spatially unbalanced economy is both wasteful and unstable. The solution requires much more than small-scale measures: "The fact that after nearly ninety years of regional policy Britain’s economy is still spatially divided between South and North suggests that the problem is a systemic one, requiring a systemic solution. It is often claimed that the success of London and the South East is merely testament to the ‘natural workings’ of the market. Some take this argument further and suggest that we should encourage economic activity and workers to abandon northern towns and cities and move to the South to maximize growth there. Such pronouncements fail to acknowledge the reality that the economies of London and the South East are not simply driven by market forces, but  also heavily underwritten by the State; that this part of the country enjoys preferential access to finance; that it is able to exert a disproportionate influence on government economic policy; and that in London it has a city which has a degree of political and economic autonomy not found in other UK cities." If systemic, the problem should be amenable to modelling. What's the mechanism? Does it imply that autonomy leads to growth?

# - Henrik Jensen: Willem and the Negative Nominal Interest Rate
   - Secular Stagnation, Coalmines, Bubbles, and Larry Summers
   - Why the future looks sluggish: "another possibility, ..., is to use today’s glut of savings to finance a surge in public investment. That might be partly linked to a shift to lower-carbon growth. Another possibility is to facilitate capital flows to emerging and developing countries, where the best investment opportunities must lie. It makes no sense for so much of the world’s savings to seek investment opportunities where they do not apparently exist and shy away from places where, one hopes, they do."
   - Secular stagnation, bubbles & inequality
   - Monetary and Fiscal Implications of Secular Stagnation [don't completely agree with:
"The point is that the case against austerity is as strong as it ever was. And maybe even stronger, once you think about debt dynamics. Right now the real interest rate on US government borrowing is about 0.5 percent on 10-year securities, negative 0.4 percent on 5-year. Meanwhile, even pessimistic estimates of US potential growth put it in the 1.5-2 percent range. So r is less than g — the real interest rate on debt is less than the normal growth rate. This in turn means that the usual worry about a rising debt level — that it will require that we eventually run big non-interest surpluses to pay down the debt — is all wrong."
Secular stagnation will lower g with r, so I'm not sure it helps public finances]
   - The (non) politics of stagnation.

# The intergalactic trade frontier: "Trade moralists are fundamentally illogical and dangerously plausible. The idea of exporting your way to recovery is seductive. But it simply is not possible for all countries to export their way to recovery. Someone, somewhere has to have a trade deficit."

# Scottish Economy Watch's "Independence Facts" series:
   - 1: Trade flows, migration flows and capital flows are significantly lower across international borders than within a country
   - 2: Small states have higher per capita GDP (are richer) than other states
   - 3: Growth in small countries is neither more or less fast than in other countries but is more volatile
   - 4: Scotland's exports to rest of UK account for 70% of its exports. Rest of UK exports to Scotland account for 11% of its exports

# I love maps like this: The UK as a cartogram

# International interest in the referendum, especially on currency, and all concluding that a currency union is not such a great idea:
   - Scotland, Sterling, and the debt
   - A history lesson for Scotland
   - Scotland must be braver "Scotland must bite the bullet and fearlessly seek to establish its own currency. ... Edinburgh ought to declare its intention to create a Scottish Central Bank and a temporary currency board that will peg the new currency to sterling before, once cross-border capital movements have been stabilised, the Scottish pound is allowed to float freely and Edinburgh’s monetary authorities set Scottish interest rates with a Scottish inflation target in mind."