The UK's decision to leave the EU is surrounded by several studies simulating its potential effects. Alternatively, we examine expectations embodied in stock returns using a two-part estimation process. While most firms' prices fell, there was considerable heterogeneity in their relative changes. We show that this heterogeneity can be explained by the firm's global value chain, with heavily European firms doing relatively worse. For firms with few imported intermediates, this was partially offset by a greater Sterling depreciation. These changes were primarily in the first two days and highly persistent. Understanding these movements gives a better understanding Brexit's potential effects.1 Norway has a free trade agreement with the EU but is not a member of the EU's customs union, so it faces the non-tariff barriers that apply to non-EU countries.2 Other studies in this vein, which cover various simulation exercises, include Head and Mayer (2015), PWC (2016), Fraser of Allander (2016) (who focus on Scotland), HM Treasury (2016),and OECD (2016). All of these find negative effects of various magnitudes whereas Minford, et al. (2016) finds the potential for positive impacts on the UK. It should be noted that Sampson, et al. (2016) argue that Minford, et al.'s optimism is based on implausible assumptions on trade barrier changes and import elasticities.3 Head and Mayer (2015) describe three possible disadvantages of Brexit for FDI. First, an increase in trade barriers makes production in the UK less attractive because it becomes more costly to ship to the rest of Europe. Second, supplying inputs and staff from brands headquarters becomes more difficult (higher co-ordination costs). Third, UK products become less attractive to EU consumer after Brexit.4 Strictly speaking, this is a return that is 14.4% worse than expectations; since in the long run a firm's return should equal the market, results in our comparison. See below for a detailed discussion of how to 11 Timmer, et al. (2014b) provide a recent overview of this literature. 12 Davies, et al. (forthcoming) find that tariff pass-through within a multinational is roughly half that of an arm's length transaction.13 See London Stock Exchange (2010) for details.

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This paper compares various estimation methods often used in the estimation of gravity models of international trade. The authors first discuss different structural and consistent estimation techniques, their underlying assumptions and their impact on estimated coefficients. They then estimate the gravity model for global bilateral trade flows using various empirical methodologies. They focus on a comparison of the distance and border effects across estimation techniques. For the border effects they take into account adjacency effects as well as the distinction between intra-regional and inter-regional trade. Their findings confirm the significantly negative distance and the significantly positive adjacency effect across estimation methods, although the size of the effects varies substantially across methods. The border effects by global regions are much more sensitive -both in size and direction -to the applied estimation method. Although all estimation methods have their own merits and drawbacks, the authors provide some guidelines for future empirical research based on their findings.

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This paper provides novel empirical evidence on the patterns and dynamics of exports by Irish firms over the past two decades from a highly detailed data set of export records at the firm‐product‐destination level. We identify patterns of export concentration and specialisation and how these evolved over time. Firms’ strategies for export growth along product and destination markets mixes are then examined and the contributions of intensive (average sales) and extensive (number of products or markets) margins to overall exports and to export growth are calculated. We find that most exporting firms are quite small, selling a few products to a small number of destinations while export values are dominated by a relatively small group of highly globalised large firms selling many products to many destinations. Continuing exporters frequently introduce new products, drop products and enter and exit markets. Export growth in the case of Irish‐owned exporters appears largely driven by the extensive margin of product and destination changes. However, the opposite pattern holds for foreign‐owned firms with growth mainly coming from the intensive margin.