The_Bilateral_Trade_Effects_of_Announcement_Shocks__Brexit_as_a_Natural_Field_Experiment_new (1).pdf (1.11 MB)
The bilateral trade effects of announcement shocks: Brexit as a natural field experiment
We analyze the effects of uncertainty and anticipation shocks associated with the 2016 Brexit vote as a treatment on trade between the UK and 14 EU and 14 non-EU trading partners, using the Synthetic Control Method (SCM). After controlling for exchange rate and GDP changes, UK exports to both groups of countries fell below those of the ‘synthetic Britain’, with much of the shortfall developing over the year prior to the referendum, following the 2015 Conservative general election win. The results indicate that UK exports to EU countries may have lost nearly 25% by early 2018, due to the Brexit shock, somewhat more than those to non-EU countries. Imports from the EU and non-EU countries also declined a little, although there is tentative evidence that UK consumers may have been avoiding countries with PTAs with the EU, and possibly turning towards the Commonwealth. Overall, the results confirm that policy uncertainty has a major effect upon trade, and that uncertainty about supply chain costs is a potential explanation for at least some of the shortfall.
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School
- Business and Economics
Department
- Economics
Published in
Journal of Applied EconometricsVolume
37Issue
2Pages
305-329Publisher
WileyVersion
- AM (Accepted Manuscript)
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© John Wiley & Sons, Ltd.Publisher statement
This is the peer reviewed version of the following article: Douch, M., & Edwards, T. H. (2022). The bilateral trade effects of announcement shocks: Brexit as a natural field experiment. Journal of Applied Econometrics, 37( 2), 305– 329, which has been published in final form at https://doi.org/10.1002/jae.2878. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.Acceptance date
2021-06-16Publication date
2021-09-29Copyright date
2021ISSN
0883-7252eISSN
1099-1255Publisher version
Language
- en
Depositor
Dr Huw Edwards. Deposit date: 17 June 2021Usage metrics
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