Quantifying Brexit: From Ex Post to Ex Ante Using Structural Gravity

Gabriel Felbermayr, Jasmin Katrin Gröschl, Marina Steininger and Gabriel J. Felbermayr
Authors registered in the RePEc Author Service: Gabriel J Felbermayr and Jasmin Groeschl

No 7357, CESifo Working Paper Series from CESifo

Abstract: Exploiting changes in the geography of economic integration in Europe, we quantify the economic consequences of Brexit using a quantitative general equilibrium model that captures inter- and intranational production networks. We isolate three important layers of EU integration for the UK: First, we distinguish directional treatment heterogeneity in the relation between the UK and the EU27 economies. Second, we disentangle tariff and non-tariff barriers in EU agreements affecting the UK, which show differential effects on the gains from trade. Third, next to European integration agreements, we consider fiscal transfers, which affect the terms-of-trade of countries. The analysis reveals that directional effects matter for the size and distribution of the welfare effects from Brexit. Neglecting asymmetries in EU-UK relations overestimates the costs from Brexit by up to 40%. The welfare costs of Brexit are higher in the UK than in most other EU counties. However, heterogeneity tends to attenuate overall costs while giving rise to substantial heterogeneity between EU27 members and between sectors. We introduce a scenario that could shift the bargaining power and eliminates asymmetries in the costs from Brexit as soon as the UK fully liberalizes its market.

Keywords: structural gravity; general equilibrium; treatment heterogeneity; Brexit (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 F17 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eec, nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp7357_0.pdf (application/pdf)

Related works:
Journal Article: Quantifying Brexit: from ex post to ex ante using structural gravity (2022)
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:ces:ceswps:_7357

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().