Economics Dissertation Estimating Macroeconomic Effects of Brexit Using Gravity and State Space Models. This dissertation aims at estimating the macroeconomic effects of Brexit using the gravity and state space model. Macroeconomics is a branch of economics that deals with the economy as a whole. The gravity model of trade is a model that is used to predict trade flows between two countries. The estimate therefore focuses on how the trade flows between the EU and the UK will be affected by the exit, and in effect how this will impact the economy as a whole. For this study, the macroeconomic indicators of trade, migration, and FDI have been considered. These variables have been fed into a gravity model for analysis on the possible effects if UK exit is applied. These variables are complex, given that they have been analyzed over long periods of time, with many countries used as parts of the equation. The findings of the research show that the UK economy will experience a negative downtu
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