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The Costs and Benefits of Leaving the EU

CFS Working Paper No. 472

18 Pages Posted: 8 Oct 2014  

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

João Paulo Pessoa

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Thomas Sampson

Harvard University

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Date Written: May 13, 2014

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.

Keywords: Trade, European Union, welfare

JEL Classification: F13, F17, F60

Suggested Citation

Ottaviano, Gianmarco I.P. and Pessoa, João Paulo and Sampson, Thomas and Van Reenen, John, The Costs and Benefits of Leaving the EU (May 13, 2014). CFS Working Paper No. 472. Available at SSRN: https://ssrn.com/abstract=2506664 or http://dx.doi.org/10.2139/ssrn.2506664

Gianmarco I.P. Ottaviano (Contact Author)

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

João Paulo Pessoa

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Thomas Sampson

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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