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The impact of uncertainty on trade agreements between the UK and EU

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If you have a question about this talk, please contact Peter Watson .

The renegotiation of a trade agreement introduces uncertainty into the economic environment. In June 2016 the British electorate unexpectedly voted to leave the European Union, introducing a new era in which the UK and EU began to renegotiate the terms of the UK-EU trading relationship. We exploit this natural experiment to estimate the impact of uncertainty associated with trade agreement renegotiation on the export participation decision of firms in the UK. Empirically, we develop measures of the trade policy uncertainty facing firms exporting from the UK to the EU after June 2016. We conclude that there would have been a 5% increase in exporting new products to the EU in 2016 and a 6.1% decrease in terminated exports from the UK to the EU if there had been no increased trade policy uncertainty after June 2016.

This talk is part of the Cambridge Statistics Discussion Group (CSDG) series.

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