The chronology of Brexit and UK monetary policy

Martin Geiger and Jochen Güntner

Journal of Monetary Economics, 2024, vol. 142, issue C

Abstract: The outcome of the Brexit referendum in June 2016 was largely unanticipated. Even after the “Leave” vote, surprises regarding the withdrawal process affected the UK economy. We draw on an official list of political events published by the House of Commons Library and daily data on asset prices and economic policy uncertainty to construct a novel instrument for Brexit surprises. Including a monthly aggregate of this instrument into a vector-autoregressive model of the UK economy, an adverse Brexit surprise lowers GDP growth while raising CPI inflation. We provide evidence that the Bank of England fended off a worse economic contraction.

Keywords: Brexit; Business cycle; Economic policy uncertainty; High-frequency identification; Monetary policy (search for similar items in EconPapers)
JEL-codes: E02 E31 E32 E44 E58 F15 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: The Chronology of Brexit and UK Monetary Policy (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:142:y:2024:i:c:s0304393223001034

DOI: 10.1016/j.jmoneco.2023.09.003

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