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The impact of Brexit uncertainties on international trade : Evidence from Belgium

Author

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  • Emerson Erik Schmitz

    (Tilburg University and Central Bank of Brazil)

Abstract

This paper investigates the short-run effects of the uncertainties brought along with the Brexit referendum on the bilateral trade between Belgium and its main trading partners. I find that import and export markets have specific dynamics and react differently to changes in political uncertainty and economic variables. While import flows are more rigid and do not react to the uncertainties related to the Brexit referendum, export flows are more sensitive to this event. Consequently, I find that the instable environment created by the Brexit referendum leads to lower intensive margin of Belgian exports to the UK in comparison to Belgium’s’ main neighboring countries. The impact of uncertainties is more pronounced in larger Belgian exporting firms in the period preceding the Brexit referendum, since these firms are better able to absorb the associated costs of postponing or diverting exports. The results for Belgian manufacturing firms, which are more responsive to changes in competitiveness, also suggest more intense reaction to the Brexit uncertainties than commodities’ producers but are not conclusive.

Suggested Citation

  • Emerson Erik Schmitz, 2019. "The impact of Brexit uncertainties on international trade : Evidence from Belgium," Working Paper Research 380, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:201912-380
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    File URL: https://www.nbb.be/fr/articles/impact-brexit-uncertainties-international-trade-evidence-belgium
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    More about this item

    Keywords

    Brexit; European Union; political uncertainty; international trade; exchange rates;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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