Modelling the effects of Brexit on the British economy

A. Patrick Minford and Zheyi Zhu
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Zheyi Zhu: Cardiff Business School

No E2023/19, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We estimate the short run effects of Brexit border disruption on the UK economy. We estimate a structural VAR for the UK where Brexit effects are identified by the dates of Brexit events, the referendum and the exit from the single market. We find evidence of short run effects of Brexit: temporary effects on GDP, exports and imports (slightly negative),and on inflation and interest rates (slightly positive). These effects are consistent with modest disruption from introducing a border with the EU- a border due to be made barrier-free and seamless by the UK-EU Trade and Cooperation Agreement. Previous work using other countries as comparators is vulnerable to identification difficulties. We also survey earlier modelling work on the long run effects of evolving policies of free trade, UK-sourced regulation and liberalised immigration. Models of long run trade suggest the emergence of substantial gains.

Pages: 24 pages
Date: 2023-07
New Economics Papers: this item is included in nep-eec and nep-int
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Related works:
Journal Article: Modeling the effects of Brexit on the British economy (2024)
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