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Does trade openness increase firm-level volatility?

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  • Strotmann, Harald
  • Döpke, Jörg
  • Buch, Claudia M.

Abstract

From a theoretical point of view, greater trade openness affects firm-level volatility by changing the exposure and the reaction of firms to macroeconomic shocks. The net effect is ambiguous, though. This paper provides firm-level evidence on the link between openness and volatility. Using two novel datasets on German firms, we analyze the evolution of firm-level output volatility and the link between volatility and trade openness. We find that firm-level output volatility displays patterns similar to those found in aggregated data for Germany. Also, smaller firms and firms that grow faster are more volatile. Increased trade openness tends to lower volatility. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2006,40.

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Date of creation: 2006
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Handle: RePEc:zbw:bubdp1:5168

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Keywords: firm-level volatility; trade openness;

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References

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Cited by:
  1. Janeba, Eckhard, 2007. "Exports, unemployment and the welfare state," Center for European, Governance and Economic Development Research Discussion Papers 60, University of Goettingen, Department of Economics.
  2. Buch, Claudia M. & Lipponer, Alexander, 2010. "Volatile multinationals? Evidence from the labor demand of German firms," Labour Economics, Elsevier, Elsevier, vol. 17(2), pages 345-353, April.
  3. Janeba, Eckhard, 2007. "Exports, unemployment and the welfare state," Center for European, Governance and Economic Development Research Discussion Papers 60, University of Goettingen, Department of Economics.
  4. Buch Claudia M & Doepke Joerg & Stahn Kerstin, 2009. "Great Moderation at the Firm Level? Unconditional vs. Conditional Output Volatility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 9(1), pages 1-27, May.
  5. Buch, Claudia M. & Döpke, Jörg & Stahn, Kerstin, 2008. "Great moderation at the firm level? Unconditional versus conditional output volatility," Discussion Paper Series 1: Economic Studies 2008,13, Deutsche Bundesbank, Research Centre.
  6. Alejandro Riaño, 2011. "Exports, Investment and Firm-Level Sales Volatility," CESifo Working Paper Series 3319, CESifo Group Munich.
  7. Calderon, Cesar & Kubota, Megumi, 2009. "Does higher openness cause more real exchange rate volatility ?," Policy Research Working Paper Series 4896, The World Bank.

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