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Non-tariff barriers and consumer prices: evidence from Brexit

Bakker, Jan, Datta, Nikhil, Davies, Richard and De Lyon, Joshua (2022) Non-tariff barriers and consumer prices: evidence from Brexit. CEP Discussion Papers (1888). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Non-Tariff Barriers (NTBs) are the main policy impediment to international trade, yet little is known about their pass-through to prices. This paper exploits the Brexit trade policy shock to quantify how NTBs affect consumer prices and welfare. The increase in NTBs raised prices by 6%, implying a pass-through of 50-80%. Based on a standard welfare framework, we show households lost £5.84bn, domestic producers gained £4.78bn, and £1.06bn was lost through deadweight loss. Due to differences in food expenditure shares, households in the lowest decile experience a 52% higher increase in the cost of living than households in the top decile.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2022 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HB Economic Theory
JEL classification: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations
F - International Economics > F1 - Trade > F15 - Economic Integration
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q11 - Aggregate Supply and Demand Analysis; Prices
Date Deposited: 27 Jan 2023 10:30
Last Modified: 27 Jan 2023 10:51

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