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Trade openness reduces growth volatility when countries are well diversified

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  • Saborowski, Christian
  • Haddad, Mona
  • Lim, Jamus Jerome
  • Pancaro, Cosimo

Abstract

This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export concentration measures, we present strong evidence pointing to an important role for export diversification in conditioning the effect of trade openness on growth volatility. Indeed, the effect of openness on volatility is shown to be negative for a significant proportion of countries with relatively diversified export baskets. JEL Classification: F15, F43, O24

Suggested Citation

  • Saborowski, Christian & Haddad, Mona & Lim, Jamus Jerome & Pancaro, Cosimo, 2012. "Trade openness reduces growth volatility when countries are well diversified," Working Paper Series 1491, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20121491
    Note: 1934813
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    References listed on IDEAS

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    More about this item

    Keywords

    export diversification; growth volatility; trade openness;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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