Exports vs. Investment: How Public Discourse Shapes Support for External Imbalances

Federico Maria Ferrara, Jörg Haas, Andrew Peterson () and Thomas Sattler
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Federico Maria Ferrara: LSE - London School of Economics and Political Science
Jörg Haas: Hertie School of Governance [Berlin]
Andrew Peterson: UFR LL [Poitiers] - Université de Poitiers – UFR Lettres et langues - UP - Université de Poitiers = University of Poitiers, Techné [Poitiers] - Technologies numériques pour l'éducation [EA 6316] - UP - Université de Poitiers = University of Poitiers
Thomas Sattler: UNIGE - Université de Genève = University of Geneva

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Abstract: The economic imbalances that characterize the world economy have unequally distributed costs and benefits. That raises the question how countries could run long-term external surpluses and deficits without significant opposition against the policies that generate them. We show that political discourse helps to secure public support for these policies and the resulting economic outcomes. First, a content analysis of 32,000 newspaper articles finds that the dominant interpretations of current account balances in Australia and Germany concur with very distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Second, survey experiments in both countries suggest that exposure to these diverging interpretations has a causal effect on citizens' support for their country's economic strategy. Political discourse, thus, is crucial to provide the societal foundation of national growth strategies.

Keywords: survey experiments; text analysis; trade; capital flows; ideas; public opinion (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-big, nep-int and nep-isf
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Published in Socio-Economic Review, 2022, 20 (4), pp.1961-1989. ⟨10.1093/ser/mwab004⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02569351

DOI: 10.1093/ser/mwab004

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