The Costs and Benefits of Leaving the EU: Trade Effects
Swati Dhingra,
Hanwei Huang,
Gianmarco Ottaviano,
Joao Paulo Pessoa,
Thomas Sampson and
John van Reenen
No 332871, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project
Abstract:
This paper estimates the welfare effects of Brexit, focusing on trade and fiscal transfers. We use a standard quantitative general equilibrium trade model with many countries and sectors and trade in intermediates, as in \citet{CR2014}. We simulate a range of counterfactuals reflecting alternative options for EU-UK relations following Brexit. Welfare losses for the average UK household are 1.3 if the UK remains in the EU's Single Market like Norway (a ``soft Brexit''). Losses rise to 2.7% if the UK trades with the EU under World Trade Organization rules (a ``hard Brexit''). A reduced form approach that captures the dynamic effects of Brexit on productivity more than triples these losses and implies a decline in average income per capita of between 6.3% and 9.4%, partly via falls in foreign investment. These negative effects are widely shared across the entire income distribution and are unlikely to be offset from new trade deals.
Keywords: International; Relations/Trade (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)
Downloads: (external link)
https://ageconsearch.umn.edu/record/332871/files/8676.pdf (application/pdf)
Related works:
Journal Article: The costs and benefits of leaving the EU: trade effects (2017) 
Working Paper: The costs and benefits of leaving the EU: trade effects (2017) 
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:ags:pugtwp:332871
Access Statistics for this paper
More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().