Trade Openness, Economic Size, and Macroeconomic Volatility: Theory and Empirical Evidence
The effects of trade openness on macroeconomic volatility are theoretically ambiguous, so the issue must be resolved empirically. Most of the empirical evidence, however, has been mixed and inconclusive. This paper investigates the question using two data sets: one of 56 countries over 1951-1998, and another of 105 countries over 1960-1997. It is shown that, when their effects are jointly estimated, both economic size and trade openness have a sizable, negative, and generally statistically significant effect on the variability of output, consumption, investment, and the exchange rate. It is also found that depreciation rates are inversely related to both economic size and openness. These effects are robust across the two data sets and three different detrending methods.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:ris:integr:0355. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jong-Eun Lee)
If references are entirely missing, you can add them using this form.