Not All Shocks Are Shared Equally: Commodity Exporters and International Risk Sharing

Emiliano Luttini, Dawit Kelemework Mekonnen, Valerie Mercer-Blackman and Bent Sorensen

No 11297, Policy Research Working Paper Series from The World Bank

Abstract: Using world commodity prices as an instrument, this paper proposes a novel method for decomposing channels of international risk sharing for commodity-exporting countries. The method identifies the commodity “sector”' as the projection of gross national product growth on commodity-price growth, and the non-commodity “sector”' as its orthogonal complement. The findings show that commodity-price-induced risk is shared significantly more than other risks, in particular via pro-cyclical government savings, but also via counter-cyclical net international factor income.

Date: 2026-01-14
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Working Paper: Not all Shocks are Shared Equally: Commodity Exporters and International Risk Sharing (2025)
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