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The Economic Effects of Brexit - Evidence from the Stock Market

Breinlich, Holger, Leromain, Elsa, Novy, Dennis, Sampson, Thomas and Usman, Ahmed (2018) The Economic Effects of Brexit - Evidence from the Stock Market Fiscal Studies, 39 (4). pp. 581-623.

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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 stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also find tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative Party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non-tariff barriers on UK-EU trade, indicating that investors may have updated their expectations in light of the possibility of a 'hard Brexit'. We do not find a correlation between the share of EU migrants in different industries and stock market returns.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Leromain, Elsa
Novy, Dennis
Sampson, Thomas
Usman, Ahmed
Date : 18 December 2018
DOI : 10.1111/1475-5890.12175
Copyright Disclaimer : 2018 The Authors. Fiscal Studies published by John Wiley & Sons Ltd. on behalf of Institute for Fiscal Studies. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.ions for Use of Self-Archived Versions.
Uncontrolled Keywords : Brexit; Depreciation; Event Study; Recession; Stock Market; Tariffs
Depositing User : Melanie Hughes
Date Deposited : 03 Oct 2018 09:36
Last Modified : 15 Mar 2019 14:56

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