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Brexit and the macroeconomic impact of trade policy uncertainty

Joseph Steinberg ()

Journal of International Economics, 2019, vol. 117, issue C, 175-195

Abstract: On June 23, 2016, the United Kingdom voted to leave the European Union. The trade policies that will replace E.U. membership are uncertain, however, and speculation abounds that this uncertainty will cause immediate harm to the U.K. economy. In this paper, I use a dynamic general equilibrium model with heterogeneous firms, endogenous export participation, and stochastic trade costs to quantify the impact of uncertainty about post-Brexit trade policies. I find that the total consumption-equivalent welfare cost of Brexit for U.K. households is between 0.4 and 1.2%, but less than a quarter of a percent of this cost is due to uncertainty.

Keywords: Brexit trade policy uncertainty; Trade; Protectionism; Welfare; Export participation; Market penetration (search for similar items in EconPapers)
JEL-codes: F12 F13 F17 F42 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Brexit and the Macroeconomic Impact of Trade Policy Uncertainty (2017) Downloads
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