via trade and investment, Brexit...

Britain’s exit from the European Union has aroused much curiosity among the analysts as what could be the possible consequences on other countries through trade and investment and on Britain itself, its effect on the domestic economy with depreciation as a possible consequence at which everybody is agreed, less imports and high exports, would happen. But, possibly increasing inflation seems more important from the policies’ perspective to give them a real edge. Prices play an important role in the economic-growth; a recent study shows that there is a real connection between the price-level and the economic-growth rate that the movement in the price-level affects economic-growth to a significant degree. In short, it means change in the price-level reflect the level of economic-activity. Moreover, real exchange-rate, real wages and real interest rates also depend upon inflation and inflation expectation, and they could affect the growth. The higher price level would lower the real exchange rate which points that you can buy less foreign exchange and imports and would also increase exports. Higher inflation and depreciation could be achieved by both, fiscal policy and the monetary policy by increasing demand and inflation by increasing liquidity. By manipulating money-supply and inflation the central banks are mainly trying to increase inflation after cutting the nominal interest rates to zero and moreover cutting the real wages by inflation when there are deflation and liquidity-trap pressures, which might demand more efforts. During the liquidity-trap nominal interest rates are cut to zero and there is an excess of supply over demand due to high unemployment and recession in the presence of low wages bargaining power and inflation. Inflation becomes an important part of the economic-polices at the zero lower bound, then the policy makers try to  lower real interest rate, real exchange  and real wages by increasing inflation to incentivize employment to increase demand and economic-growth rates. However, the economic-policies might also try to gain by disinflation/deflation and achieve higher real interest rate to increase real return on capital, to increase real-wages and domestic-demand, and also increase the real exchange rate to increase exports demand, too. Brexit mainly would lower investment and trade by increasing inflation in the economy. Nonetheless, if the referendum goes against, that would increase investment, demand and trade by lowering inflation and increasing real interest, real wages and real exchange rate. Brexit would be contractionay for the domestic demand by increasing prices, lower imports and increase only exports by lowering the real exchange rate, reduces the real wages and demand, also reduces the real interest rate which means lower savings and investment, means less demand and economic-growth. Brexit may boomerang at the economic growth rate by lowering demand… domestic and also international…