The impact of Brexit on U.K. habits for expenditure on imports and consumption

Adrian R. Fleissig and James L. Swofford

International Review of Economics & Finance, 2023, vol. 88, issue C, 196-203

Abstract: Habit persistence for imported goods and imported services has important policy implications for economic shocks like Brexit. We find a moderate amount of habit persistence in U.K. imports. Habits for imported goods declines in the post-Brexit vote sample, suggesting that habits are already changing lowering Brexit transition costs for UK consumers. Habits for imported services change little. We find imported services are generally complementary, while imported goods tend to be substitutes, for most of the other types of expenditure. Long-run budget elasticities indicate despite Brexit the U.K. economy will become more outward looking over time.

Keywords: Brexit; Habit formation; Short-run; And long-run estimates; Budget elasticities (search for similar items in EconPapers)
JEL-codes: C32 E13 E21 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:88:y:2023:i:c:p:196-203

DOI: 10.1016/j.iref.2023.06.024

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