Does 'America First' Help America? The Impact of Country Image on Exports and Welfare

SMU Economics & Statistics Working Paper No. 03-2018

60 Pages Posted: 27 Aug 2018

See all articles by Pao-Li Chang

Pao-Li Chang

Singapore Management University - School of Social Sciences

Tomoki Fujii

Singapore Management University - School of Economics

Wei Jin

Singapore Management University, School of Economics

Date Written: November 29, 2017

Abstract

This paper estimates the effects of bilateral and time-varying preference bias on trade flows and welfare. We use a unique dataset from the BBC World Opinion Poll that surveys (annually during 2005-2017 with some gaps) the populations from 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 bilateral 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, assuming that the exporting country's own preference parameters have not changed). 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 rhetorics on the US' country image might have cost the US as much as 4% of its total exports and gains from trade. In contrast, the consistent improvement of Canadian country image between 2010 and 2017 has amounted to more than 10% of its total welfare gains from trade.

Keywords: Country Image, Consumer Preferences, Trade Flows, Quantitative Welfare Analysis

JEL Classification: C23, C51, C54, F14, F5, N4

Suggested Citation

Chang, Pao-Li and Fujii, Tomoki and Jin, Wei, Does 'America First' Help America? The Impact of Country Image on Exports and Welfare (November 29, 2017). SMU Economics & Statistics Working Paper No. 03-2018. Available at SSRN: https://ssrn.com/abstract=3232951 or http://dx.doi.org/10.2139/ssrn.3232951

Pao-Li Chang (Contact Author)

Singapore Management University - School of Social Sciences ( email )

469 Bukit Timah Road
Federal Building #02-05
Singapore, 259756
Singapore
+65 68220830 (Phone)
+65 68220833 (Fax)

Tomoki Fujii

Singapore Management University - School of Economics ( email )

90 Stamford Road
178903
Singapore
+6568280279 (Phone)
+6568280833 (Fax)

HOME PAGE: http://www.mysmu.edu/faculty/tfujii/

Wei Jin

Singapore Management University, School of Economics ( email )

90 Stamford Road
Singapore, 178903
Singapore

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