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Modelling events: The short-term economic impact of leaving the EU

Author

Listed:
  • Baker, Jessica
  • Carreras, Oriol
  • Kirby, Simon
  • Meaning, Jack
  • Piggott, Rebecca

Abstract

This paper presents a framework for modelling important socio-economic events in order to provide an informative counterfactual. This involves mapping the deep underlying shock associated with the event itself into a series of more tractable shocks consistent with the model being applied and calibrated from data, existing literature or ancillary analysis. The results should then be subject to testing of their sensitivity to the assumptions made. As a practical example, the paper uses the National Institute's Global Econometric Model (NiGEM) to consider the short-term economic impact to the UK of leaving the European Union. We find that the UK economy would be around 2 1/2% smaller 2years after a decision to leave the EU when compared to the counterfactual of deciding to remain a member.

Suggested Citation

  • Baker, Jessica & Carreras, Oriol & Kirby, Simon & Meaning, Jack & Piggott, Rebecca, 2016. "Modelling events: The short-term economic impact of leaving the EU," Economic Modelling, Elsevier, vol. 58(C), pages 339-350.
  • Handle: RePEc:eee:ecmode:v:58:y:2016:i:c:p:339-350
    DOI: 10.1016/j.econmod.2016.06.012
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    Citations

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    Cited by:

    1. repec:eso:journl:v:48:y:2017:i:3:p:305-316 is not listed on IDEAS
    2. Baker, Jessica & Carreras, Oriol & Kirby, Simon & Meaning, Jack & Piggott, Rebecca, 2016. "Modelling events: The short-term economic impact of leaving the EU," Economic Modelling, Elsevier, vol. 58(C), pages 339-350.
    3. Ebell, Monique & Hurst, Ian & Warren, James, 2016. "Modelling the long-run economic impact of leaving the European Union," Economic Modelling, Elsevier, vol. 59(C), pages 196-209.
    4. repec:eee:ecmode:v:64:y:2017:i:c:p:524-538 is not listed on IDEAS
    5. Stefan Schiman, 2016. "World Economy Expected to be Hardly Affected by Britain's Exit from EU. Medium-term Forecast until 2021," WIFO Monatsberichte (monthly reports), WIFO, vol. 89(10), pages 717-727, October.
    6. László Békési & Zsolt Kovalszky & Tímea Várnai, 2017. "Scenarios for potential macroeconomic impact of Brexit on Hungary," MNB Occasional Papers 2017/125, Magyar Nemzeti Bank (Central Bank of Hungary).
    7. Joseph Steinberg, 2017. "Brexit and the Macroeconomic Impact of Trade Policy Uncertainty," 2017 Meeting Papers 216, Society for Economic Dynamics.
    8. Christian Grimme & Magnus Reif & Timo Wollmershäuser, 2016. "Die Auswirkungen des britischen Votums für einen Brexit auf die deutsche Konjunktur 2016/17," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(13), pages 38-43, July.
    9. Adele Bergin & Abian Garcia-Rodriguez & Edgar L. W. Morgenroth & Donal Smith, 2017. "Modelling the Medium- to Long-Term Potential Macroeconomic Impact of Brexit on Ireland," The Economic and Social Review, Economic and Social Studies, vol. 48(3), pages 305-316.
    10. repec:zbw:rwikon:171736 is not listed on IDEAS

    More about this item

    Keywords

    Macroeconomic modelling; Uncertainty; Risk premia; Investment;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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