WORKING PAPER 05-3

Affinity and International Trade

by Marcus Noland, Peterson Institute for International Economics

June 2005

American public attitudes toward foreign countries help explain differences in trade volumes between the US and other countries beyond what can be explained through standard economic models. A one standard deviation increase in warmth of feeling is associated with a 20 to 31 percent larger trade volume. These public attitudes are in turn correlated with indices of cultural affinity and political ideology. A one standard deviation increase in the democracy score is associated with a 5 to 7 percent increase in trade.

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