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The impact of trade policy and exchange rate shocks on trade - People

Principal investigator: Dr Meredith Crowley
Co-investigator: Professor Giancarlo Corsetti
Co-investigator: Dr Lorand Bartels
Post-doc research associate: Lu Han
PhD student: Oliver Exton
External member: Dr Huasheng Song

The impact of trade policy and exchange rate shocks on trade - Details

Title: The impact of trade policy and exchange rate shocks on trade

Sponsor: ESRC

Description: How will Brexit affect the development and growth of British manufacturing firms? Britain's popular referendum vote to exit from the European Union has created a great deal of uncertainty about the future of Britain's external trade relations with countries that belong to the European Union as well as with other major trading economies external to the EU, including the United States and China. With the government preparing for exit negotiations, little is known about the future external trade policy the UK government intends to establish with regard to European Union states as well as with non-EU countries. Two major and interrelated sources of uncertainty are (a) the future value of the pound sterling relative to the currencies of Britain's trading partners and (b) the future trade policy on imports into the UK as well as the future trade policy Britain's exports will face in the EU.

In this research project, we are conducting:

1. legal research on Britain's rights and obligations under the WTO and numerous bilateral investment treaties in order to focus the economic analysis of policy options (import tariffs, production subsidies) to those that the British government can legally use under international law;

2. economic research focused on trade policies, trade flows and trade impacts in order to predict the impact of Brexit and any proposed future trade agreements on British manufacturers that use imported inputs in their production, British firms that compete with imports in the UK market, on British exporters to EU and non-EU destinations and on workers and consumers in the UK; and

3. economic research on exchange rate pass through (ERPT) in order to forecast how changes in the value of the pound sterling will pass through into British import and export prices.

The UK in a Changing Europe website: http://ukandeu.ac.uk/

Project Publications

Published Papers

Bartels, L. The UK's Status in the WTO after Brexit, (2017) SSRN
Corsetti, C., Kuester, K. and Müller, G. J. Fixed on Flexible Rethinking Exchange Rate Regimes after the Great Recession, (2017) IMF Economic Review
Bartels, L. The UK's WTO Schedules, (2017) Global Trade and Customs Journal
Corsetti, G. Comments on "Obstfeld and Rogoff's international macro puzzles: a quantitative assessment" by J. Eaton, S. Kortum and B. Neiman, (2016) Journal of Economic Dynamics and Control
Corsetti, G. and Dedola, L. The mystery of the printing press: monetary policy and self-fulfilling debt crises, (2016) Journal of the European Economic Association
Bown, C. and Crowley, M. Emerging economies, trade policy, and macroeconomic shocks, (2014) Journal of Development Economics
Crowley, M. Tuna-dolphin II: a legal and economic analysis of the appellate body report, (2014) World Trade Review
Corsetti, G., Dedola, L., and Leduc, S. The international dimension of productivity and demand shocks in the US economy, (2014) Journal of the European Economic Association

Blogs and Commentary

Bartels, L. Understanding the UK’s position in the WTO after Brexit (Part I – The UK’s status and its schedules), ICTSD
Bartels, L. Understanding the UK’s position in the WTO after Brexit (Part II – The consequences), ICTSD

Cambridge Working Papers in Economics

Corsetti, G., Kuester, K. and Müller, G. J. Fixed on Flexible Rethinking Exchange Rate Regimes after the Great Recession, (2017) CWPE1729
Corsetti, G., Erce, A. and Uy, T. Official Sector Lending Strategies During the Euro Area Crisis, (2017) CWPE1730
Crowley, M. and Hillman, J. Slamming the door on trade policy discretion? The WTO Appellate Body's ruling on market distortions and production costs in EU-Biodiesel (Argentina), (2017) CWPE1739
Corsetti, G., Kuester, K. and Müller, G. J. The Case for Flexible Exchange Rates in a Great Recession, (2016) CWPE1644
Corsetti, G., Mavroeidi, E., Thwaites, G. and Wolf, M. Step away from the zero lower bound: Small open economies in a world of secular stagnation, (2016) CWPE1645

Authored Book

Giancarlo, C., Feld, L.P., Lane, P.R., Reichlin, L A new start for the Eurozone: dealing with debt, (2015) Monitoring the Eurozone - CEPR

Chapter in Book

Bown, C.P. and Crowley, M.A. The empirical landscape of trade policy, (2016) in the book: Handbook of commercial policy, Volume 1 - Elsevier
Crowley, Meredith Why are safeguards needed in a trade agreement?, (2010) in the book: Law and econmics of contingent protection in international trade - Cambridge University Press
Corsetti, G., Dedola, L. and Leduc, S. Optimal monetary policy in open economies, (2010) in the book: Handbook of monetary economics - North-Holland

Project Activities

Prof. Corsetti and Dr Crowley Publish Brexit Article on Project Syndicate.Org - Publication Date: 2017-12-07
Professor Giancarlo Corsetti and Dr Meredith Crowley have published an opinion editorial on the UK's post-Brexit trade strategy, "The UK's Multilateral Trade Future" on Project Syndicate.Org.

Prof. Corsetti New Column in VOXeu - Publication Date: 2017-10-23
Professor Giancarlo Corsetti, Luca Dedola, Marek Jarocinski, Bartosz Mackowiak, Sebastian Schmidt have written a new joint column for VOXeu, on "Business cycle stabilisation in the Eurozone"

Brexit and Trade Conference - Publication Date: 2017-10-17
Dr. Meredith Crowley is speaking at a Trade and Brexit event at the British Academy on 2nd November. To register for the conference Click Here.

Prof Corsetti's Vox Article Published - Publication Date: 2017-09-20
Professor Giancarlo Corsetti, Gernot Müller and Keith Kuester's article "In a Great Recession, the case for flexible exchange rates is alive and well" has been published on the Vox website.

Prof. Corsetti to speak at the RFAs Research Seminar in Singapore - Publication Date: 2017-09-06
Professor Giancarlo Corsetti will speak at the 1st Joint Regional Financing Arrangements (RFAs) Research Seminar (AMRO, ESM and FLAR) in Singapore, Sept 7th 2017, on "Official lending strategies during the euro area crisis" (joint paper with Aitor Erce and Timothy Uy).

Dr. Crowley talks to BBC World Service - Publication Date: 2017-07-07
Dr. Meredith Crowley spoke to the BBC World Service's Newshour Extra programme about globalization and her ESRC Brexit grant research. A podcast of the programme is available on the BBC website.

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