Dhingra, Swati 
ORCID: 0000-0001-5468-3415, Huang, Hanwei, Ottaviano, Gianmarco I. P., Pessoa, João Paulo, Sampson, Thomas ORCID: 0009-0006-2237-5497 and Van Reenen, John ORCID: 0000-0001-9153-2907
(2017)
The costs and benefits of leaving the EU: Trade effects.
CEP Discussion Papers (CEPDP1478).
London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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Abstract
This paper estimates the welfare effects of Brexit, focusing on trade and fiscal transfers. We use a standard quantitative general equilibrium trade model with many countries and sectors and trade in intermediates, as in Costinot and Rodríguez-Clare (2014). We simulate a range of counterfactuals reflecting alternative options for EU-UK relations following Brexit. Welfare losses for the average UK household are 1.3% if the UK remains in the EU's Single Market like Norway (a “soft Brexit”).Losses rise to 2.7% if the UK trades with the EU under World Trade Organization rules (a “hard Brexit”). A reduced form approach that captures the dynamic effects of Brexit on productivity more than riples these losses and implies a decline in average income per capita of between 6.3% and 9.4%, partly via falls in foreign investment. These negative effects are widely shared across the entire income distribution and are unlikely to be offset from new trade deals.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2017 The Authors |
| Divisions: | Economics Centre for Economic Performance |
| Subjects: | J Political Science > JN Political institutions (Europe) |
| Date Deposited: | 21 Jul 2017 09:56 |
| Last Modified: | 17 Nov 2024 20:51 |
| Funders: | Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/83612 |
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