Smaller is better: Disintegrated nations in an integrated Europe
Edoardo Campanella 12 August 2014
Separatism is on the rise in Europe. This column argues that, while the Eurozone Crisis is certainly reinforcing regional tensions, the underlying causes are globalisation and the deepening of the European project. Independence campaigners want access to the larger European market, while unfettering their regions from the centralised control of national governments. Renegotiating the terms of the relationship between national and regional governments is preferable to resorting to political threats or the use of force.
Throughout the course of history, there are few regions in the world whose map has changed as frequently and abruptly as that of Europe. Nowadays, political forces – less violent and bloody than in the past, but equally destructive – are slowly and imperceptibly eroding the borders of several countries. Tensions within states – not enmities among competing powers – are remodelling the political geography of Europe.
Europe's nations and regions Global governance Politics and economics
EU, regionalism, independence, Eurozone crisis, Catalonia, Scotland, separatism, secessionism, Flanders
The Scottish question
Angus Armstrong, Monique Ebell 26 October 2013
In the debate over Scottish independence, the question of how the UK’s assets and sovereign debt would be divided has received insufficient attention. This column argues that the size of Scotland’s debt obligations would be crucial to its optimal choice of currency. Under plausible assumptions, fiscal tightening would be required to return Scottish debt to sustainable levels, and a self-fulfilling rise in borrowing costs might tempt Scotland to leave the sterling currency union. A debt-for-oil swap might be mutually beneficial for a newly independent Scotland and the continuing UK.
In less than one year, on 18 September 2014, the Scottish electorate will vote on a question of historic significance – should Scotland remain in the UK, or should it become an independent country?
But what would an independent Scotland look like? We think that one important question that has not received nearly enough attention is debt. How will the existing UK government debt be divided between an independent Scotland and the continuing UK – assuming the remaining home nations constitute the continuing UK (Tierney 2013)?
Europe's nations and regions Macroeconomic policy
independence, debt, Currency unions, Scotland, sterling
Misplaced concerns about central-bank independence
Marco Annunziata 12 February 2013
Economists and policymakers are increasingly concerned that central-bank independence is being threatened. This column argues that central banks are not losing their independence, but that their room for manoeuvre is being eroded by a lack of structural reforms and fiscal adjustment. The financial crisis has caused mission creep, pushing central banks well beyond their comfort zones and as the time comes to pull back, independent monetary policy could still be powerless against fiscal dominance.
Concerns are rising that central-bank independence is at risk, already curtailed by governments eager to control all other levers of growth. The Japanese government’s none-too-subtle strong-arming of the Bank of Japan is one of the most blatant examples (e.g. King 2013).
But the current debate on the risks to central-bank independence misses the point.
Institutions and economics Monetary policy
ECB, Fed, Central Banks, Federal Reserve, fiscal policy, independence
Central bank independence and transparency: Not just cheap talk (Part 2)
Christopher Crowe, Ellen E. Meade 31 July 2008
Theories arguing that independent, transparent central banks fight inflation better are widely accepted, but the evidence backing them is surprisingly scarce. This column presents new empirical estimates suggesting a payoff to central bank independence and transparency.
Using the updated measures of central bank independence and transparency that we detailed in our first column, we sought to investigate what effects these aspects of central bank governance might have on economic performance.1
transparency, Central Banks, independence