Good Names Beget Favors: The Impact of Country Image on Trade Flows and Welfare

14:00-16:00, Monday, May 11, 2020

Tencent Meeting (Meeting ID: 233 831 571)

20200430071649.jpgDr. Wei JIN is an Assistant Professor at Institute of International Economics, Nankai University. He received his Ph.D. in Economics from Singapore Management University in 2018. His major interest lies in International Trade, in particular,  International Political Economy, such as World Trade Organization, Free Trade Agreements, etc. In addition, he conducts quantitative analysis of international trade to explore the welfare effects of trade policies on targeted countries.

This paper estimates the effects of time-varying consumer preference bias on trade flows and welfare. We use a unique dataset from the BBC World Service Poll, which surveys (annually during 2005-2017 with some gaps) the populations of a wide array of countries on their views of whether an evaluated country is having a mainly positive or negative influence in the world. We identify the effects on consumer preference parameters due to shifts in these country image perceptions and quantify their general equilibrium effects on bilateral exports and welfare (each time for an evaluated exporting country, holding the exporting country's own preference parameters constant). We consider five important shifts in country image: the George W. Bush effect, the Donald Trump effect, the Senkaku Islands Dispute effect, the Brexit effect, and the Good-Boy Canadian effect. We find that such changes in bilateral country image perceptions have quantitatively important trade and welfare effects. The negative impact of Donald Trump's "America First" campaign rhetoric on the US's country image might have cost the US 4-5% of its total exports and welfare gains from trade. In contrast, the consistent improvement of Canada's country image between 2010 and 2017 has amounted to more than 8% of its total welfare gains from trade.

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