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The Brexit vote, inflation and UK living standards

Breinlich, Holger, Leromain, Elsa, Novy, Dennis and Sampson, Thomas (2021) The Brexit vote, inflation and UK living standards. International Economic Review. ISSN 1468-2354 (In Press)

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Abstract

This paper studies how voting to leave the European Union affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the referendum affected consumer prices. We find the Brexit depreciation led to higher inflation in product groups with greater import shares in consumer expenditure. Our results are consistent with complete pass-through of the cost of imports to consumer prices and imply aggregate exchange rate pass-through of 0:29. We estimate the Brexit depreciation increased consumer prices by 2:9 percent, costing the average household £870 per year.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/14682354
Additional Information: © 2021 The Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
Divisions: Economics
Subjects: J Political Science > JN Political institutions (Europe) > JN101 Great Britain
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HF Commerce
Date Deposited: 17 Aug 2021 09:36
Last Modified: 01 Sep 2021 23:17
URI: http://eprints.lse.ac.uk/id/eprint/111602

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