Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan
In 2014, Scotland voted against becoming independent. But the UK’s decision to leave the EU has reignited the debate over Scottish independence. A majority of Scottish voters backed remaining in the EU (Sobolewska and Ford 2020) and the Scottish National Party has pledged to use the 2021 Scottish Parliament elections to seek a mandate for a second referendum. Although there is no guarantee the UK government will agree to a new vote, recent opinion polls show a majority of Scots favour independence (
The Herald 2020).
In recent work, we analyse the economics of independence and how Brexit affects its costs and benefits (Huang et al. 2021). We seek to answer two main questions. First, how do the estimated effects of independence compare to the impact of Brexit on the Scottish economy? Second, would an independent Scotland be better off economically inside or outside the EU?
Nauro Campos, Fabrizio Coricelli
Trade agreements are one of the most widely used policy tools for economic integration. Over the past decades, they have evolved both in volume and in scope. Whereas the predominant focus of early trade agreements was lowering tariffs, modern trade agreements contain a range of deeper provisions which go beyond the narrow remit of traditional trade policy instruments.
Such provisions apply to trade in services as well as trade in goods, and are widespread across agreements. They encompass measures ranging from recognition of professional qualifications for service providers, investment liberalisation, and intellectual property protection commitments, to policy areas such as anti-corruption, visa, and asylum. Trade agreements which include these provision types are referred to as deep trade agreements (DTAs).
Andrei Levchenko, Julian di Giovanni
After decades of globalisation, the structure of production is increasingly international, with supply chains crossing country borders. An important feature of this internationalisation of production is that the bulk of international trade linkages in a typical economy are held by only a few large firms (Freund and Pierola 2015). As a result, while only a minority of firms have direct trade linkages with foreign countries, those firms tend to account for a large share of aggregate economic activity (di Giovanni et al. 2017, 2018). How resilient is such an economy then to foreign business cycle shocks?
Our recent paper (di Giovanni et al. 2020) quantifies the consequences of a foreign shock to such an economy to study international shock transmission. Our point of departure is that even purely aggregate foreign shocks affect firms differentially depending on the extent and nature of their international linkages. In that sense, an aggregate shoc