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Freedom fries

Michaels, Guy and Zhi, Xiaojia (2010) Freedom fries. American Economic Journal: Applied Economics, 2 (3). pp. 256-281. ISSN 1945-7782

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Identification Number: 10.1257/app.2.3.256

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.

Item Type: Article
Official URL: http://www.aeaweb.org/aej-applied/index.php
Additional Information: © 2010 American Economics Association
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 01 Dec 2010 10:24
Last Modified: 09 Apr 2014 15:59
URI: http://eprints.lse.ac.uk/id/eprint/30119

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