The Impact of the Brexit Vote on UK Financial Markets: A Synthetic Control Method Approach

Matej Opatrny

No 2019/27, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We estimate how the UK _nancial markets would have evolved if the Remain camp had won the referendum. To construct thecounterfactual, we use the synthetic control method. Our results suggest that there would not have been any significant change in the development of the FTSE 100 Index in the medium to long term if there had not been a referendum. On the other hand, we find a significantly negative effect of 1.2 percentage points on the 10-year bond yield. Given the geopolitical circumstances in mid 2016, financial agents investing in the pound could have sought safer investment options represented by longer-term government bonds, which consequently could result in lower bond yields.

Keywords: Brexit; financial markets; macroeconomic indicators; synthetic control method (search for similar items in EconPapers)
JEL-codes: C10 Q10 Q18 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-09, Revised 2019-09
New Economics Papers: this item is included in nep-cfn and nep-ore
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Journal Article: The impact of the Brexit vote on UK financial markets: a synthetic control method approach (2021)
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