Minimizing the Price of Tranquility: How to Discourage Scotland's Secession from the United Kingdom
AbstractWhat some view as overly-generous funding of the Scottish parliament results from Scotland.s credible threat to secede from the United Kingdom. Scotland is shown to benefit from a second mover advantage in a non-cooperative sequential game over the allocation of public funds. Various reform proposals are criticized for not recognizing that reform of Scottish government finances must be consistent with Scotland.s credible threat. Fiscal autonomy -- in which the Scottish parliament finances a much greater proportion of its spending from Scottish-sourced taxes, is demonstrated to be a viable reform within the existing political context and, in some circumstances, could remove Scotland.s second mover advantage. We also use a cooperative bargaining game model to demonstrate that an Australian style grants commission would not be a viable reform in the British context.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2008-23.
Length: 31 pages
Date of creation: Aug 2008
Date of revision:
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Barnett formula; cooperative game; fiscal autonomy; fiscal federalism; grants commission; non-cooperative game; public finance; regional finance; Scottish executive; Scottish parliament; secession; vertical balance; United Kingdom; vertical imbalance.;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-CDM-2008-08-31 (Collective Decision-Making)
- NEP-PBE-2008-08-31 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- P Hallwood & R.MacDonald, . "A Restatement of the Case for Fiscal Autonomy (or: The Barnett Formula - a formula for Rake's Progress)," Working Papers, Business School - Economics, University of Glasgow 2006_14, Business School - Economics, University of Glasgow.
- Paul Hallwood, 2007. "From Tranquility to Secession and Other Historical Sequences: A Theoretical Exposition," Working papers, University of Connecticut, Department of Economics 2007-35, University of Connecticut, Department of Economics.
- Ronald MacDonald & Paul Hallwood, 2004. "The Economic Case for Fiscal Federalism in Scotland," Working papers, University of Connecticut, Department of Economics 2004-42, University of Connecticut, Department of Economics.
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