An Import(ant) Price of Brexit Uncertainty

Alejandro Graziano, Kyle Handley and Nuno Limão

No 31600, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the impact of trade policy uncertainty (TPU) on CES import price indices, focusing on the implications of Britain’s exit from the European Union (Brexit). Our analysis reveals that an increase in the probability of Brexit increases U.K. import price indices by raising the prices of existing products and by reducing product variety from the E.U. We find evidence that the risk of higher import protection from the 2016 referendum increased current import price indices by more than 10%. This amounted to a 2 log point increase in manufactured goods prices and a 0.6 log point decrease in consumers’ real income.

JEL-codes: D8 E02 F02 F13 F14 F15 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-eec and nep-int
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Journal Article: An import(ant) price of Brexit uncertainty (2024)
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