The Costs of Economic Nationalism: Evidence from the Brexit Experiment*

By Benjamin Born, Gernot J. Müller, M. Schularick, Petr Sedlácek. Economic Journal, 2019

187 citations recorded by the source corpus.

Economic nationalism is on the rise, but at what cost? We study this question using the unexpected outcome of the Brexit referendum vote as a natural macroeconomic experiment. Employing synthetic control methods, we first show that the Brexit vote has caused a UK output loss of 1.7% to 2.5% by year-end 2018. An expectations-augmented VAR suggests that these costs are, to a large extent, driven by a downward revision of growth expectations in response to the vote. Linking quasi-experimental identification to structural time-series estimation allows us not only to quantify the aggregate costs but also to understand the channels through which expected economic disintegration impacts the macroeconomy.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4e4841d7f6d71096d85f17263b9241d77ac51a8d

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In Economics and Econometrics

Citations in the corpus

The Impact of Brexit on UK Firms (2019, unknown): “Finally, there is the nascent Brexit literature, including papers like Van Reenen (2016), Sampson (2017), Breinlich et al. (2018), Davies and Studnicka (2018), Dhingra, et al. (2018), Graziano et al. (2018), Born et al.”
Populist Leaders and the Economy (2020, background): “Previous literature: Our paper stands in the tradition of work that examines the role of politics and institutions for economic outcomes.”