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JPCampbellBiz @JP_Biz
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Kurt Hübner the academic who produced a report on the economic impacts of a united Ireland in 2015 is launching an updated version today.
The 2015 version basically said unification would boost the economies on both parts of the Ireland, particularly NI.
It is fair to say there is not a consensus view on economic impacts of reunification. The optimistic case is that it unleashes productivity gains which would allow a 32 County state to absorb the cost of NI’s Westminster subvention.
A recent paper from John Fitzgerald & @MorgenrothEdgar is sceptical about this & suggested unification would come at a high price for the Republic, reducing income and living standards by as much as 15%
Also the original Hübnet study is quite open that it would involve shrinking public sector employment in NI, although savings from that would be reinvested.
A good place to start thinking about a United Ireland is that like other grand projets (eg Brexit) it’s doable but it involves costs & choices that you have to honest about & it will also have dynamic effects that you can’t fully grasp.
Dr Hübner begins with a health warning about the limitations of economic models. He’s using a CGE model.
A bit more about what’s in the model
The report has an intro from Marcus Noland of @PIIE saying the model is legit
Here are the main conclusions. Gains from unification, losses from other two scenarios
Dr Hübner says he doesn’t see a strong parallel with Germany because east Germany had 40 years without a market economy. Also the way Germany was unified was so sudden there was little policy planning.
Dr Hübner says they have been a bit more cautious on public sector in NI costs so this time around the modelled benefits are lower. But story is much the same: the model has reunification unleashing big productivity & output gains which basically fund the subvention.
Another recent paper to think about is @PMacF_NERI on productivity in Ireland ('A tale of three economies') How confident can we be that unification would lead to a NI catch up to Republic's level of productivity which has been driven by FDI? nerinstitute.net/download/pdf/q…
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