Research Elsa Leromain

Research team

• Economics

Expertise

I am an applied economist with interests in international trade and economic geography. My research studies the impact of trade policy shocks on major aggregate economic outcomes and then aims to understand the roots of recent opposition to liberalization by examining its distributional impact within countries. Import liberalisation brings down import costs and increases competition. But with scale economies, import liberalisation can also reduce the productivity of domestic industry by shrinking its scale, leading to lower exports. As my recent work shows, evidence from the permanent normalisation of US trade relations with China in the early 2000s reveals that increased Chinese import competition indeed reduced US exports through this channel, implying the presence of industry-level scale economies in the US. Nevertheless, aggregate US openness still increased and the liberalisation raised US welfare. I have also worked extensively on the impact of the Brexit referendum on the UK economy (stock market response, consumer prices, foreign direct investments). Using heterogeneity in exposure to import costs across product groups, I estimated that the Brexit depreciation increased UK consumer prices by 2.9%. This represents an £870 per year increase in the cost of living for the average UK household, meaning people have to work 1.4 weeks longer to afford the same goods and services. Using data on announcements of new foreign investment transactions, I also showed evidence that the Brexit vote has led to a 12% increase in the number of new investments made by UK firms in EU27 countries. At the same time, new investments in the UK from the EU27 have declined by 11%. The results are consistent with the idea that UK firms are offshoring production to the EU27 because they expect Brexit to increase barriers to trade and migration, making the UK a less attractive place to invest and create jobs.