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Country Reputation and Trade Policy Preferences - Using the News of the Election of Donald Trump as an Instrument

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Abstract

Using quasi-experimental data, a survey that was held immediately before and after the November 8th, 2016 USA elections, we analyse the impact of reputation on trade policy preference and find that the unexpected election of Donald Trump as 45th president of the USA had a sizeable negative effect on the reputation of the USA in Europe, as measured by the expectations of EU citizens about the future evolution of the USA. But this negative reputational shock seems to have affected in a positive (though not always significant) way the support for future economic cooperation with the USA, as measured by the support of EU citizens for a free trade and investment treaty with the USA. This provides some support for the idea that reputation and formal institutions are substitutes.

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  • Tom Coupé & Oleksandr Shepotylo, 2017. "Country Reputation and Trade Policy Preferences - Using the News of the Election of Donald Trump as an Instrument," Working Papers in Economics 17/08, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:17/08
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    More about this item

    Keywords

    Reputation; Trade agreements; Trump; TTIP;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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