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Department of Economics Seminar with Professor Kristóf Madarász, London School of Economics Jealousy of Trade: Economic Nationalism and Exclusionary Preferences
Abstract: This paper presents a new framework for understanding economic nationalism based on an empirically-validated desire for mimetic dominance that generates a preference for exclusionary policies. We incorporate such preferences into a frictionless model of international trade. Exclusionary pref erences lead people to favor tariffs and protectionist policies that harm both their trading partner's and their own consumption. This implies that higher prices caused by exclusionary policies like tariffs will be more acceptable than those caused by non-exclusionary policies. We provide support for these predictions through two survey experiments, which also account for the role of cognitive biases and misinformation.