American Economic Journal: Economic Policy
no. 4, November 2023
We estimate the impact of increased policy uncertainty from Brexit on UK trade in services. We apply an uncertainty-augmented gravity equation to UK services trade with the European Union at the industry level from 2016:I to 2018:IV. By exploiting the variation in the probability of Brexit from prediction markets interacted with a new trade policy risk measure across service industries, we identify a significant negative impact of the threat of Brexit on trade values and participation. The increased probability of Brexit in this period lowered services exports by at least 20 log points.
Ahmad, Saad, Nuno Limão, Sarah Oliver, and Serge Shikher.
"Brexit Uncertainty and Its (Dis)service Effects."
American Economic Journal: Economic Policy,
Trade Policy; International Trade Organizations
Empirical Studies of Trade