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The costs and benefits of leaving the EU

Author

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  • Ottaviano, Gianmarco
  • Pessoa, João Paulo
  • Sampson, Thomas
  • Van Reenen, John

Abstract

What would be the economic effects of the UK leaving the European Union on living standards of British people? We focus on the effects of trade on welfare net of lower fiscal transfers to the EU. We use a standard quantitative static general equilibrium trade model with multiple sectors, countries and intermediates, as in Costinot and Rodriguez-Clare (2013). Static losses range between 1.13% and 3.09% of GDP, depending on the assumptions used in our counterfactual scenarios. Including dynamic effects could more than double such losses.

Suggested Citation

  • Ottaviano, Gianmarco & Pessoa, João Paulo & Sampson, Thomas & Van Reenen, John, 2014. "The costs and benefits of leaving the EU," CFS Working Paper Series 472, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:472
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    References listed on IDEAS

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    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
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    3. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    4. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, vol. 88(1), pages 17-31.
    5. Fabienne Ilzkovitz & Adriaan Dierx & Viktoria Kovacs & Nuno Sousa, 2007. "Steps towards a deeper economic integration: the internal market in the 21st century," European Economy - Economic Papers 2008 - 2015 271, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    7. Facundo Albornoz & Hector Calvo-Pardo & Gregory Corcos & Emanuel Ornelas, 2012. "Sequential exporting: how firms break into foreign markets," CentrePiece - The Magazine for Economic Performance 364, Centre for Economic Performance, LSE.
    8. Thomas Sampson, 2013. "Dynamic Selection and the New Gains from Trade with Heterogeneous Firms," FIW Working Paper series 122, FIW.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The "cost" bias
      by chris in Stumbling and Mumbling on 2015-02-27 20:04:22

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    Cited by:

    1. Stefanie Gäbler & Manuela Krause & Antonia Kremheller & Luisa Lorenz & Niklas Potrafke, 2017. "Die Brexit-Verhandlungen - Inhalt und Konsequenzen für das Vereinigte Königreich und die EU," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(07), pages 55-59, April.
    2. Nobuhiro Hosoe, 2017. "Impact of Border Barriers, Returning Migrants, and Trade Diversion in Brexit: Firm Exit and Loss of Variety," GRIPS Discussion Papers 17-04, National Graduate Institute for Policy Studies.
    3. Pierre Boulanger & George Philippidis, 2015. "The End of a Romance? A Note on the Quantitative Impacts of a ‘Brexit’ from the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(3), pages 832-842, September.
    4. 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.
    5. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2016. "The Brexit Trade Disruption Revisited," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 17(1).
    6. Swati Dhingra & Gianmarco Ottaviano & Veronica Rappoport & Thomas Sampson & Catherine Thomas, 2017. "UK Trade and FDI: A Post-Brexit Perspective," CEP Discussion Papers dp1487, Centre for Economic Performance, LSE.
    7. Crafts, Nicholas, 2016. "The Growth Effects of EU Membership for the UK: a Review of the Evidence," CAGE Online Working Paper Series 280, Competitive Advantage in the Global Economy (CAGE).
    8. repec:eee:ecmode:v:67:y:2017:i:c:p:45-54 is not listed on IDEAS

    More about this item

    Keywords

    Trade; European Union; welfare;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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