The Economic Gordian Knot of Brexit: An East Asian Perspective

Abstract

We evaluate the impact of Brexit on Asian economies using a new index - the TIFTEL-Index (The International Financial-Trade Exchange Leaking Index). The index is based on three main variables, namely (1) international trade exchange marginal rate (∆Τ’), (2) international financial exchange marginal rate (∆σ’), and (3) GDP in real prices growth marginal rate (∆γ). The main objective of this paper is to use the index to analyze and compare pre-Brexit versus post-Brexit international trade and international financial transactions between Asia and Europe. The comparative analysis indicates that Brexit will have only a limited negative effect on the world economy. In addition, Brexit will affect East Asia more than ASEAN.

Keywords: Asia, Brexit, Europe, Economic Modeling, Policy Modeling

JEL Classification: F1, F3, G1