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Exposure to External Country Specific Shocks and Income Volatility

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  • Jansen, Marion
  • Lennon, Carolina
  • Piermartini, Roberta

Abstract

Using a dataset of 104 countries over a period from 1966 to 2004, this paper analyses the relevance of country specific shocks for income volatility in open economies. We show that exposure to country specific shocks has a positive and significant impact on GDP volatility. In particular, we find that the degree to which the cycles of different trading partners are correlated is more important in explaining exporters’ GDP volatility than the volatility of demand in individual export market. We also show that geographical diversification is a significant determinant of countries' exposure to country specific shocks.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7123.

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Date of creation: Jan 2009
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Handle: RePEc:cpr:ceprdp:7123

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Keywords: export diversification; external shocks; income volatility;

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References

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Citations

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Cited by:
  1. Starosta de Waldemar, Felipe, 2010. "How costly is rent-seeking to diversification: an empirical approach," Proceedings of the German Development Economics Conference, Hannover 2010 4, Verein für Socialpolitik, Research Committee Development Economics.
  2. Peter McQuade, 2009. "The Evolution of International Trade on the Extensive and Intensive Margins," The Institute for International Integration Studies Discussion Paper Series iiisdp325, IIIS, revised Apr 2010.
  3. Brito, Marcio Holland de, 2010. "Inserção comercial do Brasil na américa do sul: um estudo sobre os efeitos da China na região," Textos para discussão 248, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).

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