We develop a network trade model with country-sector level input-output linkages with the objective of evaluating trade shocks. This framework includes (1) domestic and global value chain linkages between all country-sectors, (2) trade flows via domestic and foreign sectors to a final destination, (3) value added rather than gross trade flows. The model is applied to the sectoral World Input Output Database (WIOD) to predict the impact of Brexit for every individual EU country by aggregating up the country-sector effects. In contrast to other studies, we find EU-27 job losses to be substantially higher than hitherto believed as a result of the closely integrated EU network structure. Upstream country-sectors stand to lose more from Brexit due to their network centrality.
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Hylke Vandenbussche, William Connel and Wouter Simons
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Sir Clive Granger BuildingUniversity of NottinghamUniversity Park Nottingham, NG7 2RD
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