The welfare effects of international trade with optimistic and pessimistic managers

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Date
2004
Indexation documentaire
Economie internationale
Subject
Optimism; Free trade commitment; Trade losses; Idiosyncratic risk
Code JEL
F1; D8
Nom de la revue
Economics Bulletin
Volume
6
Numéro
15
Date de publication
10-2004
Pages article
1-10
Nom de l'éditeur
Vanderbilt University
URI
https://basepub.dauphine.fr/handle/123456789/92
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Auteur
Blanchard, Michel
Peltrault, Frédéric
Type
Article accepté pour publication ou publié
Résumé en anglais
This paper investigates the welfare effects of international trade when technological idiosyncratic risk is distorted by optimistic and pessimistic managers. We show that free trade always improves the ex-ante welfare but sometimes lowers the ex-post welfare. Free trade commitment can be regretted ex-post.