Trade and FDI-Related Impacts of Brexit

33 Pages Posted: 30 Apr 2018

See all articles by María C. Latorre

María C. Latorre

Universidad Complutense de Madrid (UCM) - Faculty of Economics and Business Administration

Zoryana Olekseyuk

Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE)

Hidemichi Yonezawa

Statistics Norway

Date Written: April 25, 2018

Abstract

We offer a general equilibrium analysis of Brexit incorporating the state-of-the-art differences in productivity and firms’ selection within manufacturing sectors à la Melitz (2003) and multinationals in services. Trade, output and average productivity diminish across most sectors in the UK and the Rest of the European Union (REU), as well as GDP, welfare, wages and capital remuneration. However, the UK loses more due to the missing preferential access to the huge EU market. Emergence of barriers against multinationals explains approximately one third of the negative effect in both the UK and REU. Other regions remain nearly unaffected.

Keywords: Multinationals, CGE, Melitz, Monopolistic Competition, Trade in Services

JEL Classification: C68, F14, F15, F17, F21

Suggested Citation

Latorre, María C. and Olekseyuk, Zoryana and Yonezawa, Hidemichi, Trade and FDI-Related Impacts of Brexit (April 25, 2018). Available at SSRN: https://ssrn.com/abstract=3168434 or http://dx.doi.org/10.2139/ssrn.3168434

María C. Latorre

Universidad Complutense de Madrid (UCM) - Faculty of Economics and Business Administration ( email )

School of Business Administration
Somosaguas Campus
Madrid, Madrid 28223
Spain

Zoryana Olekseyuk

Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE) ( email )

Tulpenfeld 4
Bonn, 53113
Germany

Hidemichi Yonezawa (Contact Author)

Statistics Norway ( email )

N-0033 Oslo
Norway

Register to save articles to
your library

Register

Paper statistics

Downloads
121
Abstract Views
628
rank
230,302
PlumX Metrics