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The welfare effects of international trade with optimistic and pessimistic managers

Blanchard, Michel; Peltrault, Frédéric (2004), The welfare effects of international trade with optimistic and pessimistic managers, Economics Bulletin, 6, 15, p. 1-10

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Type
Article accepté pour publication ou publié
Date
2004
Journal name
Economics Bulletin
Volume
6
Number
15
Publisher
Vanderbilt University
Pages
1-10
Metadata
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Author(s)
Blanchard, Michel
Peltrault, Frédéric
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.
Subjects / Keywords
Optimism; Free trade commitment; Trade losses; Idiosyncratic risk
JEL
F1 - Trade
D8 - Information, Knowledge, and Uncertainty