Very clever by Sedláček et al.. And this certainly looks right: 2% of GDP as the (ongoing) cost of the Boris Johnson BREXIT clown show: Benjamin Born, Gernot Müller, Moritz Schularick, and Petr Sedláček: £350 Million a Week: The Output Cost of the Brexit Vote: "The current cost of Brexit... counterfactual... a matching algorithm... combination of comparison economies best resembles the pre-referendum growth path of the UK economy.... The negative drag from the Brexit vote now appears to be roughly £350 million a week...
...Our approach does not depend on having the right model for the British, the European, or even the global economy. We do not assume a particular Brexit deal, or construct specific scenarios for the outcome of the negotiations. Instead we create a transparent, unbiased, and entirely-data driven ‘Brexit cost tracker’ that relies on synthetic control methods.... We let an algorithm determine which combination of other economies matched the evolution of real GDP in the UK before the Brexit vote with highest possible accuracy.... The algorithm choses the economies and weights assigned.... For the UK, our matching algorithm attributes high weights to Canada and the US, but also to Japan and Hungary.... As the doppelganger is not treated with the Brexit vote, it will continue to evolve in a similar way to how the pre-Brexit economy would have evolved if the referendum had never happened....
What are the economic causes of the output decline?... Increased uncertainty, which may temporarily depress investment and consumption spending. Anticipated lower future living standards, as the reduction in trade with the continent would be likely to make the UK permanently poorer...
#shouldread
