 Modelling the long-run economic impact of leaving the European UnionMonique Ebell, Ian Hurst and James Warren Economic Modelling, 2016, vol. 59, issue C, 196-209 Abstract: We model the long-term implications of leaving the EU for the UK economy using NiGEM, the National Institute's large scale structural global econometric model. We examine a scenario in which the UK has no free trade agreement with the EU, focusing on four key shocks: a permanent reduction in the size of the UK's export market share in EU member countries, an increase in tariffs, a permanent reduction in inward FDI flows and the repatriation of the UK's projected net contributions to the EU budget. We calibrate the size of the shocks on a synthesis of the academic evidence. We explain how each of these four shocks is implemented in NiGEM, as well as examining the key mechanisms by which they are propagated through the model. The export market share channel is the main mechanism by which leaving the EU leads to declines in GDP and consumption relative to the long-run baseline, accounting for a long-run decline in GDP of 2.1% relative to the baseline value, out of a total projected reduction in GDP relative to the baseline of 2.7%. Keywords: Free trade agreements; International trade; Foreign direct investment; NiGEM (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:59:y:2016:i:c:p:196-209 DOI: 10.1016/j.econmod.2016.06.020 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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