Estimating the trade and welfare effects of Brexit: A panel data structural gravity model

Harald Oberhofer, Michael Pfaffermayr

Publication: Scientific journalJournal articlepeer-review

Abstract

This paper proposes a new panel data structural gravity approach for estimating the trade and welfare effects of Brexit. Assuming different counterfactual post-Brexit scenarios, our main findings suggest that the UK's exports of goods to the EU are likely to decline within a range between 7.2% and 45.7% six years after Brexit has taken place. For the UK, the negative trade effects are only partially offset by an increase in domestic trade and trade with third countries, inducing a decline in the UK's real income of between 0.3% and 5.7%. The estimated welfare effects for the EU are not different from zero, but some members like Ireland are expected to also experience welfare losses.
Original languageEnglish
Pages (from-to)338 - 375
JournalCanadian Journal of Economics
Volume54
Issue number1
DOIs
Publication statusPublished - 2021

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502025 Econometrics
  • 502027 Political economy
  • 502003 Foreign trade
  • 502013 Industrial economics

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