Ardelean, Adina, Leon-Ledesma, Miguel A., Puzzello, Laura (2024) Growth Volatility and Trade: Market Diversification vs. Production Specialization. Journal of Economic Behavior and Organization, . ISSN 0167-2681. (In press) (Access to this publication is currently restricted. You may be able to access a copy if URLs are provided) (KAR id:106511)
PDF
Author's Accepted Manuscript
Language: English Restricted to Repository staff only
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
|
|
Contact us about this Publication
|
![]() |
Abstract
We analyze how trade affects aggregate volatility using a multi-country, multi-industry, 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 84 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.
Item Type: | Article |
---|---|
Uncontrolled keywords: | Output Volatility, Destination Shocks, Origin Shocks, Trade Diversification, Specialization |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Divisions > Division of Human and Social Sciences > School of Economics |
Funders: |
University of Kent (https://ror.org/00xkeyj56)
Monash University Prato Centre (https://ror.org/009436s82) |
Depositing User: | Miguel Leon-Ledesma |
Date Deposited: | 08 Jul 2024 08:56 UTC |
Last Modified: | 09 Jul 2024 08:45 UTC |
Resource URI: | https://kar.kent.ac.uk/id/eprint/106511 (The current URI for this page, for reference purposes) |
- Export to:
- RefWorks
- EPrints3 XML
- BibTeX
- CSV
- Depositors only (login required):