Working Paper: News Uncertainty in Brexit UK

Working Paper - August 2020 - No. 160

Authors Faccini, Renato Maurizio Marco (Danmarks Nationalbank); Palombo, Edoardo (Queen Mary, University of London)
Subject Recent economic and monetary trends; Productivity and competitiveness
Type Working paper
Year 2020
Published 11 August 2020
After the Brexit referendum, the behavior of the UK economy defied widespread expectations, as it did not exhibit a V-shaped recession, but a slow decline in production. We show that this pattern of propagation arises when uncertainty is about future, rather than current fundamentals, and if the expected duration of uncertainty is sufficiently long.