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Trade-related effects of Brexit. Implications for Central and Eastern Europe

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  • Hagemejer, Jan
  • Dunin-Wasowicz, Maria
  • Michalek, Jan
  • Szyszka, Jacek

Abstract

We use a global computable general equilibrium model to analyze several scenarios of Brexit. We mainly focus on the impact of Brexit on the New Member States of the EU to complement the existing literature on Brexit. Our scenarios are based on two reasonable expectations on the outcome of the process of negotiations, ie. the Soft Brexit with a limited FTA and a Hard Brexit governed by WTO MFN rules. The shocks imposed on the CGE model include modifications of both tariff and non-tariff barriers. While the former are based on actual tariff data, the latter are estimated using an econometric model for both merchandise trade and services. Our results show that in spite of the UK being one of the most important trading partners for many of the NMS, Poland in particular, the macroeconomic effects of Brexit are mild, even in the case of a Hard Brexit. In the most pessimistic scenario of a Hard Brexit, in the long run they amount to a fall of GDP of roughly 0.4 percent. However, there are some sectors that may experience somewhat significant drops in output, in particular the food sector and some other manufacturing export-oriented sectors.

Suggested Citation

  • Hagemejer, Jan & Dunin-Wasowicz, Maria & Michalek, Jan & Szyszka, Jacek, 2020. "Trade-related effects of Brexit. Implications for Central and Eastern Europe," Conference papers 333187, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333187
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    References listed on IDEAS

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    More about this item

    Keywords

    International Relations/Trade;

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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