Brexit Uncertainty and Its (Dis)service Effects

Saad Ahmad, Nuno Limão, Sarah Oliver and Serge Shikher

American Economic Journal: Economic Policy, 2023, vol. 15, issue 4, 459-85

Abstract: We estimate the impact of increased policy uncertainty from Brexit on UK trade in services. We apply an uncertainty-augmented gravity equation to UK services trade with the European Union at the industry level from 2016:I to 2018:IV. By exploiting the variation in the probability of Brexit from prediction markets interacted with a new trade policy risk measure across service industries, we identify a significant negative impact of the threat of Brexit on trade values and participation. The increased probability of Brexit in this period lowered services exports by at least 20 log points.

JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Brexit Uncertainty and its (Dis)Service Effects (2020)
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DOI: 10.1257/pol.20200808

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