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Wishing Ill for Your Country,
- Publisher
- American Economic Association
- Copyright
- Copyright © 2010 by the American Economic Association
- Subject
- Articles
- ISSN
- 1945-7790
- eISSN
- 1945-7790
- DOI
- 10.1257/app.2.3.256
- Publisher site
- See Article on Publisher Site
Abstract
Abstract Do firms always choose the cheapest suitable inputs, or can group attitudes affect their choices? To investigate this question, we examine the deterioration of relations between the United States and France from 2002–2003, when France's favorability rating in the US fell by 48 percentage points. We estimate that the worsening attitudes reduced bilateral trade by about 9 percent and that trade in inputs probably declined similarly, by about 8 percent. We use these estimates to calculate the average decrease in firms' willingness to pay for French (or US) commodities when attitudes worsened. (JEL D24, F13, F14, L14, L21 )
Journal
American Economic Journal: Applied Economics – American Economic Association
Published: Jul 1, 2010