The welfare effects of international trade with optimistic and pessimistic managers

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Date
2004
Dewey
Economie internationale
Sujet
Optimism; Free trade commitment; Trade losses; Idiosyncratic risk
JEL code
F1; D8
Journal issue
Economics Bulletin
Volume
6
Number
15
Publication date
10-2004
Article pages
1-10
Publisher
Vanderbilt University
URI
https://basepub.dauphine.fr/handle/123456789/92
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Author
Blanchard, Michel
Peltrault, Frédéric
Type
Article accepté pour publication ou publié
Abstract (EN)
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.