Growth volatility and trade: Market diversification vs. production specialization

Arbeitspapier

We analyze how trade affects aggregate volatility using a multi-country, multiindustry, and multi-destination framework. We decompose aggregate output growth risk into destination risk, origin risk, and idiosyncratic risk (and their covariances). We then use this framework to run counterfactuals changing the degree of destination market diversification (including home) and industry specialization. Using data on 19 industrial sectors, 34 countries, and 85 destination markets for the 1980-2011 period, we find that destination risk dominates, followed by idiosyncratic risk. From the counterfactuals, we find that the effect of increased destination market diversification is quantitatively important in reducing aggregate volatility for high volatility countries. On the other hand, reducing specialization increases volatility.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: School of Economics Discussion Papers ; No. 2202

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Economic Integration ; International Business Cycles ; Economic Impacts of Globalization: Microeconomic Impacts
• Thema: Output Volatility ; Destination Shocks ; Origin Shocks ; Trade Diversification ; Specialization

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ardelean, Adina ; León-Ledesma, Miguel A. ; Puzzello, Laura
• Ereignis: Veröffentlichung
• (wer): University of Kent, School of Economics
• (wo): Canterbury
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/265212