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Does industrial concentration impact on the relationship between policies and volatility?

Author

Listed:
  • Winston Moore
  • Carlon Walkes

Abstract

It is usually recommended that countries diversify their economies to guard against any negative shocks that might impact on one industry. However, previous research has not identified how concentration can impact on the effectiveness of macroeconomic policies. This paper attempts to evaluate the relationship between industrial concentration, policies and economic volatility for a sample of 147 countries for the period 1970 to 2005. The study reports that less concentrated countries tend to have lower rates of output, consumption and investment growth volatility. In addition, while trade and capital account openness variables alone tend to diminish economic volatility, in concentrated economies opening both the capital and trade account can increase economic volatility.

Suggested Citation

  • Winston Moore & Carlon Walkes, 2010. "Does industrial concentration impact on the relationship between policies and volatility?," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(2), pages 179-202.
  • Handle: RePEc:taf:irapec:v:24:y:2010:i:2:p:179-202
    DOI: 10.1080/02692170903424315
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    References listed on IDEAS

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    1. Bejan, Maria, 2006. "Trade Openness and Output Volatility," MPRA Paper 2759, University Library of Munich, Germany.
    2. Andres, Javier & Domenech, Rafael & Fatas, Antonio, 2008. "The stabilizing role of government size," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 571-593, February.
    3. William C. Brainard & Richard N. Cooper, 1965. "Uncertainty and Diversification in International Trade," Cowles Foundation Discussion Papers 197, Cowles Foundation for Research in Economics, Yale University.
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    Cited by:

    1. repec:spr:endesu:v:19:y:2017:i:2:d:10.1007_s10668-016-9763-1 is not listed on IDEAS
    2. Romina Kazandjian & Lisa L Kolovich & Kalpana Kochhar & Monique Newiak, 2016. "Gender Equality and Economic Diversification," IMF Working Papers 16/140, International Monetary Fund.
    3. Alibek Konkakov & Gulaikhan Kubayeva, 2016. "Progress in diversification of the economy in Kazakhstan," Working Papers 2016/8, Maastricht School of Management.
    4. Papageorgiou,Chris & Spatafora,Nikola L. & Wang,Ke, 2015. "Diversification, growth, and volatility in Asia," Policy Research Working Paper Series 7380, The World Bank.

    More about this item

    Keywords

    diversification; volatility; policies;

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