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An Import(ant) Price of Brexit Uncertainty

Author

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  • Alejandro G. Graziano
  • Kyle Handley
  • Nuno Limão

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 an increase in the probability of Brexit increases U.K. import price indices by raising the prices of existing products and by 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 more than 10%. This amounted to a 2 log point increase in manufactured goods prices and a 0.6 log point decrease in consumers’ real income.

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  • Alejandro G. Graziano & Kyle Handley & Nuno Limão, 2023. "An Import(ant) Price of Brexit Uncertainty," NBER Working Papers 31600, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31600
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    More about this item

    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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