Deep Integration and UK-EU Trade Relations

Mulabdić, Alen; Osnago, Alberto; Ruta, Michele

doi:10.1596/1813-9450-7947

Cited by 41 publications

(41 citation statements)

References 17 publications

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“…The reduced form estimates calculated above are based on estimates of the impact of Brexit on the UK's trade with the EU. Ebell (2016), HM Treasury (2016) and Mulabdic, Osnago, and Ruta (2017) all find positive effects of EU membership on trade levels and although the size of the effects varies across papers it is generally larger than estimated by Baier, Bergstrand, Egger, and McLaughlin (2008). 20 For example, Mulabdic, Osnago, and Ruta (2017) estimate how Brexit will affect UK trade using a new database on the coverage of different trade agreements collected by Hofmann, Osnago, and Ruta (2017).…”

Section: Reduced Form Brexit Estimatesmentioning

confidence: 99%

“…Using the estimates inTable 5, column 1 implies leaving the EU and joining EFTA would reduce the UK's trade with EU members by (e 0.19 − e 0.65 )/e 0.65 = 36.9% which implies a decline in UK income per capita of between 9.2% and 13.8%. By using the estimates inTable 6, column 1 we obtain a more conservative estimate of the costs of Brexit.21 These numbers are calculated using the estimates inTable 6ofMulabdic, Osnago, and Ruta (2017) together with the fact that in 2014 goods made up 72% UK-EU trade and services 28% (Office for National Statistics, 2016).…”

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confidence: 99%

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The costs and benefits of leaving the EU: trade effects

et al. 2017

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This paper estimates the welfare effects of Brexit, focusing on trade and fiscal transfers. We use a standard quantitative general equilibrium trade model with many countries and sectors and trade in intermediates, as in Costinot and Rodríguez-Clare (2014). We simulate a range of counterfactuals reflecting alternative options for EU-UK relations following Brexit. Welfare losses for the average UK household are 1.3% if the UK remains in the EU's Single Market like Norway (a "soft Brexit"). Losses rise to 2.7% if the UK trades with the EU under World Trade Organization rules (a "hard Brexit"). A reduced form approach that captures the dynamic effects of Brexit on productivity more than triples these losses and implies a decline in average income per capita of between 6.3% and 9.4%, partly via falls in foreign investment. These negative effects are widely shared across the entire income distribution and are unlikely to be offset from new trade deals.

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Section: Reduced Form Brexit Estimatesmentioning

confidence: 99%

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confidence: 99%

The costs and benefits of leaving the EU: trade effects

et al. 2017

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“…Notes: Depth decreases from 44 to 36 in the "Norway" scenario, to 14 in the "average PTA", and to 0 in the "noagreement" scenario. Source: Mulabdic et al (2017)…”

Section: Undoing Trade Agreements: Brexit and Gvcs 10mentioning

confidence: 99%

Preferential Trade Agreements and Global Value Chains: Theory, Evidence, and Open Questions

Ruta

2017

Self Cite

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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“…Indeed, according to Johnson (2014) and Acemoglu et al (2012) the emergence of global production networks implies that one can no longer consider bilateral trade in isolation when evaluating trade policy or idiosyncratic shocks. This is particularly true in the case of Brexit considering that most trade between the UK and EU countries is in intermediate inputs (see section 4; Mulabdic et al, 2017;J. Chen et al, 2018).…”

Section: Econometric Models In Brexit Impact Studiesmentioning

confidence: 99%

Tariffs, Domestic Import Substitution and Trade Diversion in Input-Output Production Networks: How to Deal with Brexit

Giammetti

2019

SSRN Journal

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This paper challenges and complements existing studies on the economic impact of Brexit providing a discussion of the UK's decision to leave the EU and how it will affect international trade networks and value-added. Using the World Input-Output Database, we develop a multi-sector inter-country model that allows us to identify the channels through which the economic effects of Brexit would propagate. The inclusion of global value chains and indirect Brexit effects in the model leads to estimates that diverge with the results of the main literature. Indeed our findings, suggest that Brexit could be risky and costly not only for the UK but also for many EU countries. Furthermore, building on the Dietzenbacher and Lahr (2013) method of hypothetical expansion, we develop a second model and present the first empirical analysis on the consequences of domestic import substitution and trade diversion policies in Input-Output schemes. We found that allowing sectors and countries to partly substitute foreign products, leads to significantly lower losses for both macro-regions. In the second model, the UK and EU27 would lose, at worst, the 0.05 and 0.5 percent of value-added, respectively.

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Deep Integration and UK-EU Trade Relations

Cited by 41 publications

References 17 publications

The costs and benefits of leaving the EU: trade effects

The costs and benefits of leaving the EU: trade effects

Preferential Trade Agreements and Global Value Chains: Theory, Evidence, and Open Questions

Tariffs, Domestic Import Substitution and Trade Diversion in Input-Output Production Networks: How to Deal with Brexit

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