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Freedom Fries

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  • Guy Michaels
  • Xiaojia Zhi

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)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 2 (2010)
Issue (Month): 3 (July)
Pages: 256-81

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Handle: RePEc:aea:aejapp:v:2:y:2010:i:3:p:256-81

Note: DOI: 10.1257/app.2.3.256
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References

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  1. Anne-Célia Disdier & Thierry Mayer, 2006. "Je t'aime, moi non plus : Bilateral Opinions and International Trade," Working Papers 2006-01, CEPII research center.
  2. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
  3. Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 905-930, October.
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  5. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  6. Cecilia Rouse & Claudia Goldin, 2000. "Orchestrating Impartiality: The Impact of "Blind" Auditions on Female Musicians," American Economic Review, American Economic Association, vol. 90(4), pages 715-741, September.
  7. Larry Chavis & Phillip Leslie, 2006. "Consumer Boycotts: The Impact of the Iraq War on French Wine Sales in the U.S," NBER Working Papers 11981, National Bureau of Economic Research, Inc.
  8. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
  9. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination In A Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 351-377, February.
  10. Stefano DellaVigna & Ethan Kaplan, 2006. "The Fox News Effect: Media Bias and Voting," NBER Working Papers 12169, National Bureau of Economic Research, Inc.
  11. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," CEPR Discussion Papers 7114, C.E.P.R. Discussion Papers.
  12. David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," 2004 Meeting Papers 530, Society for Economic Dynamics.
  13. Petra Moser, 2008. "An Empirical Test of Taste-based Discrimination Changes in Ethnic Preferences and their Effect on Admissions to the NYSE during World War I," NBER Working Papers 14003, National Bureau of Economic Research, Inc.
  14. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  15. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  16. Kiminori Matsuyama, 2007. "Beyond Icebergs: Towards a Theory of Biased Globalization," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 237-253.
  17. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Freedom fries: How attitudes shape trade flows
    by jdingel in Trade diversion on 2010-08-05 15:20:42
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Cited by:
  1. Julia Cagé & Dorothée Rouzet, 2013. "Improving "National Brands": Reputation for Quality and Export Promotion Strategies," PSE Working Papers halshs-00797006, HAL.
  2. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "International Politics and Import Diversification in the Second Wave of Globalization," Development Working Papers 342, Centro Studi Luca d\'Agliano, University of Milano, revised 13 Nov 2012.
  3. Martin, Philippe & Mayer, Thierry & Thoenig, Mathias, 2010. "The geography of conflicts and free trade agreements," CEPREMAP Working Papers (Docweb) 1019, CEPREMAP.
  4. Vasiliki Fouka & Hans-Joachim Voth, 2013. "Reprisals Remembered: German-Greek Conflict and Car Sales during the Euro Crisis," Working Papers 726, Barcelona Graduate School of Economics.
  5. Moses Shayo & Asaf Zussman, 2011. "Judicial Ingroup Bias in the Shadow of Terrorism," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1447-1484.
  6. Moser, Petra, 2012. "Taste-based discrimination evidence from a shift in ethnic preferences after WWI," Explorations in Economic History, Elsevier, vol. 49(2), pages 167-188.
  7. Julia Cagé & Dorothée Rouzet, 2013. "Improving "National Brands": Reputation for Quality and Export Promotion Strategies," Working Papers halshs-00797006, HAL.
  8. Vasiliki Fouka & Joachim Voth, 2012. "Reprisals remembered: German-Greek conflict and car sales during the Euro crisis," Economics Working Papers 1394, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2013.

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