Trade Openness and Volatility

Andrei Levchenko and Julian di Giovanni

No 2008/146, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the mechanisms through which output volatility is related to trade openness using an industry-level panel dataset of manufacturing production and trade. The main results are threefold. First, sectors more open to international trade are more volatile. Second, trade is accompanied by increased specialization. Third, sectors that are more open are less correlated with the rest of the economy. The point estimates indicate that each of the three effects has an appreciable impact on aggregate volatility. Added together they imply that the relationship between trade openness and overall volatility is positive and economically significant.

Keywords: WP; trade openness (search for similar items in EconPapers)
Pages: 60
Date: 2008-06-01
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Trade Openness and Volatility (2009)
Working Paper: Trade Openness and Volatility (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2008/146

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