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Critical Letters in Economics & Finance

Abstract

The UK decision to leave the EU has larger implications for Ireland due to its historical connections and significant exposure to the UK’s economy. As such, uncertainty derived from Brexit negotiations and the variety of scenarios raise significant concerns regarding the impact, the magnitude, and the lasting effects of the shock to the Irish economy. This study explores the relationship between economic and political uncertainty surrounding Brexit and its potential causal effects on the Irish economy with the support of Pesaran’s ARDL model. The agriculture, manufacturing, chemical and pharmaceutical sectors are the focus of attention as they are considered to be the most exposed to the UK market. The research findings suggest that the manufacturing and food sectors would be the most impacted in the short run with the rest of examined sectors following suit. The research findings are of particular interest to stock market players and policymakers, who can gain a better understanding of short-term dynamics on the Irish export sectors and their potential implications for Ireland. This is especially important as we consider a double economic shock due to the combined effects of Covid-19 economic shutdown and Brexit.

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License.

DOI

https://doi.org/10.21427/s7cx-8c21

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