Advanced Search
MyIDEAS: Login to save this paper or follow this series

Freedom Fries

Contents:

Author Info

  • Guy Michaels
  • Xiaojia Zhi

Abstract

Do firms choose inputs that minimize their cost of production, ignoring the attitudes of their owners and employees? We examine this question using an episode of worsening relations between the US and France: from February 2002 to March 2003, France's favorability rating in US public opinion polls fell from 83 percent to 35 percent. Very negative attitudes towards France became common even among college educated Americans with high levels of income, so they were likely prevalent among managers. Using data from 1999-2005, we find that the worsening relations reduced US imports from France by about 15 percent and US exports to France by about 8 percent, compared to other Eurozone or OECD countries. This decline was due in large part to a fall in France's share of the quantity of inputs traded between the Eurozone and the US; this decline is significant even after we control for changes in the product composition of trade flows. We also find that the decline in trade w as accompanied by a similar drop in both business trips and tourist visitations of US residents to France compared to Western Europe. Taken together, our findings suggest that competition cannot eliminate the effect of attitudes on firms' choice of inputs.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://cep.lse.ac.uk/pubs/download/dp0815.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0815.

as in new window
Length:
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:cep:cepdps:dp0815

Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

Related research

Keywords: Trade; Discrimination;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  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. 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.
  4. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Guy Michaels & Xiaojia Zhi, 2007. "Freedom fries," LSE Research Online Documents on Economics 3255, London School of Economics and Political Science, LSE Library.
  6. 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.
  7. Christian Broda & David Weinstein, 2004. "Globalization and the gains from variety," Staff Reports 180, Federal Reserve Bank of New York.
  8. 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.
  9. 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.
  10. Orley Ashenfelter & Stephen Ciccarella & Howard J. Shatz, 2007. "French Wine and the U.S. Boycott of 2003: Does Politics Really Affect Commerce?," NBER Working Papers 13258, National Bureau of Economic Research, Inc.
  11. Claudia Goldin & Cecilia Rouse, 1997. "Orchestrating Impartiality: The Impact of "Blind" Auditions on Female Musicians," NBER Working Papers 5903, National Bureau of Economic Research, Inc.
  12. Larry Chavis & Phillip Leslie, 2009. "Consumer boycotts: The impact of the Iraq war on French wine sales in the U.S," Quantitative Marketing and Economics, Springer, vol. 7(1), pages 37-67, March.
  13. Stefano DellaVigna & Ethan Kaplan, 2007. "The Fox News Effect: Media Bias and Voting," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1187-1234, 08.
  14. 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.
  15. 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.
  16. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
  17. 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.
  18. Kiminori Matsuyama, 2007. "Beyond Icebergs: Towards a Theory of Biased Globalization," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 237-253.
  19. 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.
Full references (including those not matched with items on IDEAS)

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
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. 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.
  2. Guy Michaels & Xiaojia Zhi, 2007. "Freedom fries," LSE Research Online Documents on Economics 51598, London School of Economics and Political Science, LSE Library.
  3. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "InternationalPolitics and Import Diversification in the Second Wave of Globalization," Discussion Papers Series, Department of Economics, Tufts University 0770, Department of Economics, Tufts University.
  4. Julia Cagé & Dorothée Rouzet, 2014. "Improving "National Brands": Reputation for Quality and Export Promotion Strategies," PSE Working Papers halshs-00797006, HAL.
  5. Martin, Philippe & Mayer, Thierry & Thoenig, Mathias, 2010. "The geography of conflicts and free trade agreements," CEPR Discussion Papers 7740, C.E.P.R. Discussion Papers.
  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. 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.
  8. repec:hal:wpaper:halshs-00797006 is not listed on IDEAS
  9. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g8m2hh491 is not listed on IDEAS

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0815. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.