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Measuring Openness

Author

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  • Imbs, Jean
  • Pauwels, Laurent

Abstract

We introduce a measure of exposure to foreign shocks -openness- that computes the fraction of output subjected to foreign shocks at any order. The measure is easy to obtain for any sector with input-output data; It implies that openness is much more prevalent than often thought, especially in services. Theoretically the new measure correlates systematically with the response of productivity to foreign shocks because it reflects high order linkages in output (rather than trade). Empirically it also correlates highly with productivity in an international sample of sector level data. None of these conclusions are true for conventional measures of openness.

Suggested Citation

  • Imbs, Jean & Pauwels, Laurent, 2022. "Measuring Openness," CEPR Discussion Papers 17230, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17230
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    More about this item

    Keywords

    Measurement of openness; Global value chains; Shock propagation; Growth; Productivity; Synchronization; Instrumenting openness;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General

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