Policy

Policy Publications

Assessing the Macroeconomic Impact of Brexit through Trade and Migration Channels (Banco de España Occasional Paper DO1911, May 2019)

with Antoine Berthou and Sophie Haincourt (Banque de France), Ángel Estrada (Banco de España) and Alexander Kadow (Deutsche Bundesbank)

This joint work by the Bundesbank, the Banque de France and the Banco de España highlights some of the numerous channels through which Brexit will affect the UK economy and its economic partners. In particular, it focuses on trade and migration channels, adding a more general assessment of exiting the EU through the use of a gravity model. The trade channel alone may cut UK GDP by 2% over the medium term if the UK reverts to WTO rules, while a more general gravity model would point to UK GDP falling by almost 6% compared to baseline. According to our analysis, the ‘cost of non-Europe’ (such as originally stated by Cecchini’s seminal work in 1988) lies therefore between 2% and 6% in terms of real GDP losses for the UK. With the shock being largely asymmetric, the EA remains relatively unscathed by the UK’s exit, with GDP less than 1% lower than baseline by 2023. The study also shows that results are sensitive to the envisaged policy response. In general, monetary and fiscal policies may act to cushion a Brexit-related shock; however, the potency of the policy response depends on the underlying source of the shock.

The Global Impact of a Slowdown in China (Banco de España Economic Bullitin, Q4 2019 , also available in Spanish)

Given its systemic importance, a sharp and sustained economic slowdown in China affects the world economy, not only on account of its share of global GDP, but also because of its links with other economies through trade, the commodities markets and, on a more incipient level, the global financial system. Developments in China also have indirect effects on global uncertainty and confidence. This article presents various simulations of the negative impact that a sharper slowdown in the Chinese economy than expected by the main analysts would have on the global economy and, especially, on the euro area. Specifically, a further slowdown in annual growth of 1 pp in China would give rise to a decline in global growth of 0.4 pp in a year, with particularly marked effects on commodities producers and on the Asian economies.

La UE frente al Brexit: El canal comercial (in Spanish)

with Alejandro Buesa and Juan-Luis Vega, Revista “Economistas”, Colegio de Economistas de Madrid, No. 166, 2020

SMEs in the Netherlands – Making a difference

Deutsche Bank Research Briefing, April 2011

Further Policy Contributions

· “Global Economic Effects of the Health Crisis”, Banco de España, Annual Report 2019, Box 2.1

· “Global Economic Effects of the Health Crisis”, in the Analytical Article: “Reference macroeconomic Scenarios for the Spanish Economy after Covid-19”, Economic Bulletin 2/2020, Box 2

· “Economic Effects of the Health Crisis in Latin America”, Banco de España, Economic Bulletin 2/2020 - Report on the Latin American Economy. Second half of 2020, Box 3

· “The Global Impact of a Hypothetical Economic Slowdown in China”, Banco de España, Annual Report 2018, Box 1.1

· “Rising Protectionism between the United States and China and its Effects on the Global Economy”, Banco de España, Economic Bulletin 3/2019, Quarterly Report on the Spanish Economy, Box 2

· “The Effects of Global Trade Tensions on Latin America”, Banco de España, Economic Bulletin 4/2019, Report on the Latin American Economy. Second half of 2019, Box 1

· “Implications for Emerging Market Economies of a faster-than-expected monetary policy tightening in the United States”, Banco de España, Economic Bulletin 4/2018 – Report on the Latin American Economy. Second half of 2018, Box 1

· “An Estimate of the Impact of the Recent Protectionist Measures”, Banco de España, Economic Bulletin 2/2018, Quarterly report on the Spanish Economy, Box 1

· “The change in macroeconomic policy stance in the United States”, Banco de España, Economic Bulletin 2/2018 - Quarterly report on the Spanish economy, Box 2