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
TypeArticle accepté pour publication ou publié
Journal nameEconomics Bulletin
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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 / KeywordsOptimism; Free trade commitment; Trade losses; Idiosyncratic risk
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