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MaxPo Discussion Paper No. 21/3
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo), Paris
HM Treasury's estimation of the economic consequences of Brexit - using standard macroeconomic models - during the EU referendum campaign represents a remarkable intervention in a highly politicized public debate. It raises a series of questions about the use of economic expertise. Through a detailed theoretical and empirical critique of the Treasury's methodology - and a reassessment of the likely effects of Brexit in light of this - we cast doubt on the utility of their approach, highlighting methodological issues, unrealistic assumptions, and misrepresentations of established facts. In the process we seek to identify some of the wider implications for the use and potential abuse of economic expertise in highly charged political contexts, such as the EU referendum debate.
DSGE model
economic consequences
economic expertise
gravity model
HM Treasury
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Working Paper

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