Academic Paper

An Import(ant) Price of Brexit Uncertainty

Graziano, A., Handley, K. and Limao, N., ‘An import(ant) price of Brexit uncertainty’ (August 2023), NBER paper 31600.

Published 26 August 2023

We estimate the impact of trade policy uncertainty (TPU) on CES import price indices, focusing on the implications of Britain’s exit from the European Union (Brexit). Our analysis reveals that an increase in the probability of Brexit increases U.K. import price indices by raising the prices of existing products and by reducing product variety from the E.U. We find evidence that the risk of higher import protection from the 2016 referendum increased current import price indices by more than 10%. This amounted to a 2 log point increase in manufactured goods prices and a 0.6 log point decrease in consumers’ real income.

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Alejandro G. Graziano

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