Scottish home prices: compatible with Euro membership?

Although the Scottish electorate voted down independence in 2014, Brexit has led to renewed calls from Scottish political leaders for a second referendum. Scottish independence would likely lead to joining the European Union, and this would obligate Scotland to eventually join the euro common curren...

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Autor principal:	William Miles
Formato:	article
Lenguaje:	EN
Publicado:	Università Carlo Cattaneo LIUC 2021
Materias:	housing supply and markets business fluctuations cycles macroeconomic issues of monetary unions Economics as a science HB71-74
Acceso en línea:	https://doaj.org/article/bae7343826d94387b3e2b03229b6153d
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spelling	oai:doaj.org-article:bae7343826d94387b3e2b03229b6153d2021-11-25T10:47:12ZScottish home prices: compatible with Euro membership?10.25428/1824-2979/202101-3-221824-2979https://doaj.org/article/bae7343826d94387b3e2b03229b6153d2021-06-01T00:00:00Zhttps://ejce.liuc.it/18242979202101/182429792021180101.pdfhttps://doaj.org/toc/1824-2979Although the Scottish electorate voted down independence in 2014, Brexit has led to renewed calls from Scottish political leaders for a second referendum. Scottish independence would likely lead to joining the European Union, and this would obligate Scotland to eventually join the euro common currency. If Scottish home prices were not highly cohesive with those in euro zone countries, the ECB’s monetary policy could cause major disruptions for Scottish housing, and, by extension, the Scottish economy. As an example, if most euro-country home values were rising, but those in Scotland were falling, the ECB would likely run a tight monetary policy, which would be devastating to housing conditions in Scotland. We accordingly investigate the co-movement of house prices in Scotland with those in eight major euro zone countries, as well as co-movement between Scottish and UK home prices, using a variety of metrics. The use of methods that are primarily linear indicates that joining the euro may not result in a large loss of co-movement with other regional housing markets, compared to Scotland’s current correlation with UK national home prices. However, the use of a measure that takes into account differences in the magnitude, and not just the phase of cycles yields results indicating Scotland exhibits very little co-movement with other euro housing markets. Indeed Scotland has co-movement metrics within the euro countries at levels similar to those of Spain and Ireland, which both suffered devastating booms and busts. Thus leaving sterling for the euro could be highly problematic.William MilesUniversità Carlo Cattaneo LIUCarticlehousing supply and marketsbusiness fluctuationscyclesmacroeconomic issues of monetary unionsEconomics as a scienceHB71-74ENThe European Journal of Comparative Economics, Vol 18, Iss 1, Pp 3-22 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	housing supply and markets business fluctuations cycles macroeconomic issues of monetary unions Economics as a science HB71-74
spellingShingle	housing supply and markets business fluctuations cycles macroeconomic issues of monetary unions Economics as a science HB71-74 William Miles Scottish home prices: compatible with Euro membership?
description	Although the Scottish electorate voted down independence in 2014, Brexit has led to renewed calls from Scottish political leaders for a second referendum. Scottish independence would likely lead to joining the European Union, and this would obligate Scotland to eventually join the euro common currency. If Scottish home prices were not highly cohesive with those in euro zone countries, the ECB’s monetary policy could cause major disruptions for Scottish housing, and, by extension, the Scottish economy. As an example, if most euro-country home values were rising, but those in Scotland were falling, the ECB would likely run a tight monetary policy, which would be devastating to housing conditions in Scotland. We accordingly investigate the co-movement of house prices in Scotland with those in eight major euro zone countries, as well as co-movement between Scottish and UK home prices, using a variety of metrics. The use of methods that are primarily linear indicates that joining the euro may not result in a large loss of co-movement with other regional housing markets, compared to Scotland’s current correlation with UK national home prices. However, the use of a measure that takes into account differences in the magnitude, and not just the phase of cycles yields results indicating Scotland exhibits very little co-movement with other euro housing markets. Indeed Scotland has co-movement metrics within the euro countries at levels similar to those of Spain and Ireland, which both suffered devastating booms and busts. Thus leaving sterling for the euro could be highly problematic.
format	article
author	William Miles
author_facet	William Miles
author_sort	William Miles
title	Scottish home prices: compatible with Euro membership?
title_short	Scottish home prices: compatible with Euro membership?
title_full	Scottish home prices: compatible with Euro membership?
title_fullStr	Scottish home prices: compatible with Euro membership?
title_full_unstemmed	Scottish home prices: compatible with Euro membership?
title_sort	scottish home prices: compatible with euro membership?
publisher	Università Carlo Cattaneo LIUC
publishDate	2021
url	https://doaj.org/article/bae7343826d94387b3e2b03229b6153d
work_keys_str_mv	AT williammiles scottishhomepricescompatiblewitheuromembership
_version_	1718413581587841024

Scottish home prices: compatible with Euro membership?

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