
Should Risk Averse Countries be Trade Averse?
Blanchard, Michel; Peltrault, Frédéric (2003), Should Risk Averse Countries be Trade Averse?, EUROPEAN TRADE STUDY GROUP, 2003-09, Madrid, Espagne
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Type
Communication / ConférenceDate
2003Conference title
EUROPEAN TRADE STUDY GROUPConference date
2003-09Conference city
MadridConference country
EspagnePages
18
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Show full item recordAbstract (EN)
Taking seriously the stylized fact that some countries are more risk averse than others regarding business activities, we examine the consequences on international trade and welfare. When risk is idiosyncratic to each manager's project, international differences in manager's risk-aversion distribution become the determinant of trade pattern. Welfare analysis shows that the less risk averse country specialized in the risky commodity is always better off with free trade. But the more risk averse country specialized in unrisky commodity can be worse off. Consequently, risk averse countries can be "trade averse". Moreover, the world's welfare is sometimes decreasing.Subjects / Keywords
idiosyncratic risk; inferior trade; International trade; risk-aversionRelated items
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Blanchard, Michel; Peltrault, Frédéric (2004) Article accepté pour publication ou publié
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Blanchard, Michel; Peltrault, Frédéric (2004) Communication / Conférence
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Peltrault, Frédéric; Blanchard, Michel (2005) Communication / Conférence
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Blanchard, Michel; Peltrault, Frédéric (2005) Article accepté pour publication ou publié