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Non-tariff barriers and consumer prices: evidence from Brexit

Author

Listed:
  • Jan David Bakker
  • Nikhil Datta
  • Richard Davies
  • Josh De Lyon

Abstract

Non-Tariff Barriers (NTBs) are the main policy impediment to international trade, yet little is known about their pass-through to prices. This paper exploits the Brexit trade policy shock to quantify how NTBs affect consumer prices and welfare. The increase in NTBs raised prices by 6%, implying a pass-through of 50-80%. Based on a standard welfare framework, we show households lost £5.84bn, domestic producers gained £4.78bn, and £1.06bn was lost through deadweight loss. Due to differences in food expenditure shares, households in the lowest decile experience a 52% higher increase in the cost of living than households in the top decile.

Suggested Citation

  • Jan David Bakker & Nikhil Datta & Richard Davies & Josh De Lyon, 2022. "Non-tariff barriers and consumer prices: evidence from Brexit," CEP Discussion Papers dp1888, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1888
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    References listed on IDEAS

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    Cited by:

    1. Dennis Novy & Thomas Sampson & Catherine Thomas, 2024. "Brexit and UK trade," CEP Election Analysis Papers 058, Centre for Economic Performance, LSE.

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    More about this item

    Keywords

    Brexit; policy; shocks; wellbeing; welfare; cost of living; non-tariff barriers;
    All these keywords.

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