Results

Journal article

Review of Economics and Statistics:

Trade, gravity and aggregation.

Gravity equations are an important tool in empirical international trade research. We study to what extent sector-level parameters can be recovered from aggregate gravity equations estimated via Poisson pseudo maximum li...Read more...

Blog

LSE Politics and Policy:

Stop performative Brexit and do what works for the British economy

Brexit has left its mark on UK international trade, although, so far, the effect has been smaller than economists expected. Dennis Novy, Thomas Sampson and Catherine Thomas review recent UK trade performance and argue th...Read more...

CEP election analysis

Brexit and UK trade

This briefing summarises the evidence about how leaving the European Union (EU) has affected UK trade. Overall, Brexit has had a negative effect on UK trade. But, so far, this effect has been smaller than economists expe...Read more...

Submission to a parliamentary inquiry and government consultation

The UK's economic security

The inquiry aims to determine what the risks and vulnerabilities are to the UK's economic security and will scrutinise whether the Government has the necessary powers and capabilities in place to intervene in the economy...Read more...

Blog

Vox EU:

Urban-biased structural change

Economic activity in high-income countries has shifted towards services and away from manufacturing. But research remains scant on the patterns of structural change within countries across urban and rural areas. Using mi...Read more...

CEP discussion paper

Urban-biased structural change

Using firm-level data from France, we document that the shift of economic activity from manufacturing to services over the last few decades has been urban-biased: structural change has been more pronounced in areas with ...Read more...

Journal article

Economy Policy: Forthcoming

Dennis Novy discussion of: Startups and employment

New firms, or startups, come into being all the time. Their lives are precarious at the beginning: many firms close down after a short while, and only few firms have a long-run future. Among those that survive, a small m...Read more...

Journal article

The Economic Journal:

Gravity and heterogeneous trade cost elasticities

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

Blog

VoxEU:

Import liberalisation as export destruction: evidence from the United States

Holger Breinlich, Elsa Leromain, Dennis Novy and Thomas Sampson look at US-China trade relations to examine how import liberalisation brings down import costs and increases competition, but can also lead to lower export ...Read more...

Journal article

Journal of the European Economic Association:

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s...Read more...

Journal article

International Economic Review:

The Brexit vote, inflation and UK living standards

This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the...Read more...

Journal article

International Economic Review:

Estimating border effects: the impact of spatial aggregation

Trade data are typically aggregated across space. In this article, we investigate the sensitivity of gravity estimation to spatial aggregation. We build a model in which micro regions are aggregated into macro regions. W...Read more...

CEP discussion paper

Trade, gravity and aggregation

Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity...Read more...

Blog

VoxEU:

The impact of trade costs can be weak or strong - depending on how much countries trade

Many countries try to bring down trade costs by striking free trade agreements, forming currency unions or joining the WTO. But when trade costs fall, how much does trade increase? Natalie Chen and Dennis Novy explain th...Read more...

CEP discussion paper

Import liberalization as export destruction? Evidence from the United States

How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce an industry's exports by cutting domestic production. We find this export destruction mechanism...Read more...

Journal article

Review of Economics and Statistics:

Trade and uncertainty

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the idea of uncertainty shocks with international trade. Firms order inputs from home and fore...Read more...

Journal article

Asian Economic Policy Review:

Trade Blocs and Trade Wars during the Interwar Period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

Journal article

European Economic Review:

Voting with their money: Brexit and outward investment by UK firms

We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% i...Read more...

CEP discussion paper

Exchange rates and consumer prices: evidence from Brexit

This paper studies how the depreciation of sterling following the Brexit referendum affected consumer prices in the United Kingdom. Our identification strategy uses input-output linkages to account for heterogeneity in e...Read more...

CEP discussion paper

Voting with their money: Brexit and outward investment by UK firms

We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% i...Read more...

CentrePiece article

In brief... Brexit and outward investment by UK firms

Media reports have highlighted that some UK firms have started to move production abroad in anticipation of Brexit. CEP analysis confirms that there has indeed been a substantial increase in outward investments. The shif...Read more...

CEP discussion paper

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of transactions in our sample invoiced in neither sterling nor the exporter's cur...Read more...

CEP discussion paper

Trade blocs and trade wars during the interwar period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

CEP Brexit analysis

Voting with their money: Brexit and outward investment by UK firms

Foreign direct investment (FDI) has grown rapidly in recent decades. Through FDI, firms headquartered in the UK can own and operate subsidiaries throughout the world. FDI opportunities give firms a choice between investi...Read more...

Journal article

European Journal of Political Economy:

Who voted for Brexit? Individual and regional data combined

Previous analyses of the 2016 Brexit referendum used region-level data or small samples based on polling data. The former might be subject to ecological fallacy and the latter might suffer from small-sample bias. We use ...Read more...

Journal article

Fiscal Studies:

The Economic Effects of Brexit: Evidence from the Stock Market

We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors� expectations about the effects of leaving theEuropean Union on the UK economy. Our results suggest that initial sto...Read more...

CEP discussion paper

The economic effects of Brexit - evidence from the stock market

We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors’ expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stoc...Read more...

Journal article

Journal of International Economics:

Market Potential and Global Growth over the Long Twentieth Century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Currency unions, trade and heterogeneity

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

CEP Brexit analysis

The Brexit vote, inflation and UK living standards

The vote to leave the European Union (EU) was an unanticipated shock to the UK economy that increased uncertainty and reduced the country’s expected future openness to trade, investment and immigration with the EU. Our r...Read more...

Journal article

Economic Policy:

Who voted for Brexit? A comprehensive district-level analysis

On 23 June 2016, the British electorate voted to leave the European Union (EU). We analyse vote and turnout shares across 380 local authority areas in the United Kingdom. We find that exposure to the EU in terms of immig...Read more...

CEP discussion paper

Who voted for Brexit? A comprehensive district-level analysis

On 23 June 2016, the British electorate voted to leave the European Union. We analyse vote and turnout shares across 380 local authority areas in the United Kingdom. We find that exposure to the EU in terms of immigratio...Read more...

CEP discussion paper

Estimating border effects: the impact of spatial aggregation

Trade data are typically reported at the level of regions or countries and are therefore aggregates across space. In this paper, we investigate the sensitivity of standard gravity estimation to spatial aggregation. We bu...Read more...

CentrePiece article

TTIP: is free trade coming to the North Atlantic?

If successfully concluded, the Transatlantic Trade and Investment Partnership (TTIP) would be the most ambitious free trade agreement in history. Dennis Novy explains that while the potential benefits from liberalised tr...Read more...

CEP discussion paper

Trade and uncertainty

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the ...Read more...

CEP discussion paper

On the Measurement of Trade Costs: Direct vs. Indirect Approaches to Quantifying Standards and Technical Regulations

In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on nontariff measures and in particular on standards and technical regulations. We distinguish ‘d...Read more...

CEP discussion paper

Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade

Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a u...Read more...

CEP discussion paper

Gravity Redux: Measuring International Trade Costs with Panel Data

Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded meas...Read more...

CEP discussion paper

International Trade Without CES: Estimating Translog Gravity

This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and substitution patterns across goods. In contrast to standard CES-based gr...Read more...

CEP discussion paper

International Trade Integration: A Disaggregated Approach

This paper investigates the sources and size of trade barriers at the industry level. We derive a micro-founded measure of industry-specific bilateral trade integration that has an in-built control for time-varying multi...Read more...