Fiscal devolution in Scotland : a multi-sectoral analysis

  • Tobias Emonts-Holley

Student thesis: Doctoral Thesis

Abstract

This thesis employs multi-sectoral modelling techniques to analyse the potential impact of Fiscal Devolution for Scotland. A Social Accounting Matrix (SAM) is constructed,which captures the flows of funds in Scotland for 2009.The SAM is then disaggregated to identify the three government sectors operating in Scotland, namely the UK Government, the Scottish Government and the Local Government.Also, the tax account is disaggregated to identify three tax accounts, each corresponding to one of the three government sectors. Moreover, the unified household sector in the SAM is disaggregated to identify seven household sectors by type.The disaggregated government and household accounts are then combined into one SAM.Next, the Type II Input-Output multiplier model and the SAM multiplier model are tested and analysed. Three variants of the Type II output multiplier are tested against the SAM multiplier as a baseline. The results here establish that the SAM multiplier captures the flows of funds in the Scottish economy in the most accurate and comprehensive way.The standard SAM model is then extended to endogenise part of the Government sector in Scotland, the Scottish Government and the Local Government. This enables the model to capture the effects of an exogenous demand shock under different degrees of fiscal devolution for Scotland. The results indicate that a more fiscally autonomous Scotland is subject to higher sensitivities to shocks.Finally, this thesis employs a Computable General Equilibrium model (AMOS) for Scotland. The model is extended to capture the three Government accounts in the SAM. The model is used to simulate a balanced budget fiscal expansion, where the increase in tax revenue funds a rise in government consumption. The results suggest that a positive valuation of the increase in public amenity provision and a full reflection of that in the wage bargaining process are crucial for a net growth outcome.
Date of Award1 Oct 2015
LanguageEnglish
Awarding Institution
  • University Of Strathclyde
SponsorsESRC (Economic and Social Research Council)
SupervisorJohn Swales (Supervisor) & Peter McGregor (Supervisor)

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