EconPapers    
Economics at your fingertips  
 

Brexit or Euro for the UK? Evidence from Panel Data

Petros E. Ioannatos ()
Additional contact information
Petros E. Ioannatos: Kettering University

Comparative Economic Studies, 2021, vol. 63, issue 1, No 4, 117-138

Abstract: Abstract An alternative course to Brexit for the UK is evaluated. The purpose of the study is to determine whether the UK would have been better off had, instead of Brexit, remained in the EU and joined the Eurozone. The model specification is based on the neoclassical theory of growth extended to include human capital accumulation. Counterfactual analysis in terms of the difference-in-differences methodology is applied to evaluate the effect in UK’s per capita income if the UK had joined the Eurozone when the Eurozone was formed. The dataset is a balanced panel of annual observations for fifteen countries and covers the period from 1980 to 2017. The analysis reveals that had the UK joined the Eurozone, UK’s per capita income would have been 15.48% higher on the average for the period after the formation of the Eurozone. This effect increases to 24.98% if Eurozone’s less performing economies of the southern periphery are excluded from the analysis. The study shows that Brexit is a move toward the wrong direction. The UK should have sought further integration with the EU in terms of presence in the Eurozone than pursue Brexit and leave the EU.

Keywords: Brexit; European Union; Euro; Eurozone; Neoclassical growth theory; Panel data; Natural experiment; Difference-in-differences; Fixed effects (search for similar items in EconPapers)
JEL-codes: C54 F15 F17 F33 F36 F60 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1057/s41294-020-00119-y Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:compes:v:63:y:2021:i:1:d:10.1057_s41294-020-00119-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41294/PS2

DOI: 10.1057/s41294-020-00119-y

Access Statistics for this article

Comparative Economic Studies is currently edited by Nauro Campos

More articles in Comparative Economic Studies from Palgrave Macmillan, Association for Comparative Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-12
Handle: RePEc:pal:compes:v:63:y:2021:i:1:d:10.1057_s41294-020-00119-y