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An import(ant) price of Brexit uncertainty

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  • Graziano, Alejandro G.
  • Handley, Kyle
  • Limão, Nuno

Abstract

We estimate the impact of trade policy uncertainty (TPU) on CES import price indices, focusing on the implications of Britain’s exit from the European Union (Brexit). Our analysis reveals that a higher probability of Brexit increases U.K. import price indices by raising the prices of existing products and reducing product variety from the E.U. We find evidence that the risk of higher import protection from the 2016 referendum increased current import price indices by 11 log points. This amounted to a 2 log point increase in manufactured goods prices and a 0.6 log point decrease in consumers’ real income.

Suggested Citation

  • Graziano, Alejandro G. & Handley, Kyle & Limão, Nuno, 2024. "An import(ant) price of Brexit uncertainty," Journal of International Economics, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:inecon:v:152:y:2024:i:c:s0022199624001399
    DOI: 10.1016/j.jinteco.2024.104012
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    Cited by:

    1. Costa, Rui & Dhingra, Swati & Machin, Stephen, 2024. "New dawn fades: Trade, labour and the Brexit exchange rate depreciation," Journal of International Economics, Elsevier, vol. 152(C).

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    More about this item

    Keywords

    Brexit; Uncertainty; Prices; International trade;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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