30 November 2018
L. Alan Winters CB, Professor of Economics and Director of the UK Trade Policy Observatory, Dr Michael Gasiorek, a Senior Lecturer in Economics at the University of Sussex and Peter Holmes, Reader in Economics at the University of Sussex both fellows of the UK Trade Policy Observatory.
On Tuesday, the UK Government released a set of cross-Departmental estimates of the possible economic costs of different Brexit options. They were based on the Government’s own modelling, which uses a technique known as a Computable General Equilibrium modelling and is based on the Global Trade Analysis Project (GTAP) consortium’s world model and dataset. The aim is to model (very approximately) the important linkages in an economy over a medium to long-term horizon and to assess the possible impact of changes in trade policy on the economy. (Short-term modelling, over a five year period, was simultaneously released by the Bank of England, but we do not discuss it here). The modelling approach is relatively standard, has been applied competently and honestly and produces results fairly much in line with other studies of the impact of Brexit.
This blog highlights some of the trade-related aspects of the modelling exercise and its results. As with all modelling, the main issues concern the assumptions that users input into the model rather than the model itself. (more…)
Charlotte Humma November 30th, 2018