Balassa Index (Balassa 1965) is widely used in the literature to measure country-sector Revealed Comparative Advantage (RCA). However, being computed on observed trade flows, it mixes up all the factors influencing trade flows. In particular, Balassa Index cannot isolate exporter-sector (ex ante) specific factors which are the source of comparative advantage in the spirit of the traditional trade model. Furthermore, Balassa Index suffers some empirical distribution weaknesses, mainly time instability and poor ordinal ranking property (Yeats 1985;Hinloopen and Van Marrewijk 2001). A recent paper by Costinot et al. (2012) provides a micro-founded version of the Ricardian model and suggests a new measure for comparative advantage. We build up on this paper, and present a dataset providing a new econometric based measure for Ricardian RCA.

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We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors’ expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also find tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non‐tariff barriers on UK–EU trade, indicating that investors may have updated their expectations in light of the possibility of a ‘hard Brexit’. We do not find a correlation between the share of EU immigrants in different industries and stock market returns.

This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the referendum affected consumer prices. We find that the Brexit depreciation led to higher inflation in product groups with greater import shares in consumer expenditure. Our results are consistent with complete pass-through of import costs to consumer prices and imply aggregate exchange rate pass-through of 0.29. We estimate the Brexit depreciation increased consumer prices by 2.9%, costing the average household £870 per year.