IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Does Trade Openness Make Countries Vulnerable?

Listed author(s):
  • Alessandro Federici


    (ENEA - Italian National Agency for New Technologies)

  • Pierluigi Montalbano


    (Department of Economic Theory - Sapienza University of Rome (Italy))

This paper focuses on the welfare costs of exposure to shocks linked to trade openness, an issue that is of main interest for international economic policy. It addresses the question as to whether the current process of trade liberalisation has a net destabilising effect on partner countries, increasing their vulnerability. Starting from a broader definition of vulnerability than simply vulnerability to poverty because of trade openness, this paper highlights, presenting both probit and 3SLS estimates, a robust and significant long term relationship (1960-2007), in a large sample of countries, between the “extreme volatility” of consumption (crisis and boom) - induced by trade openness - and the deviation of consumption growth from its expected path. The novelty of this paper lies in its ability to match two strands of the literature (volatility and vulnerability). It improves the existing literature on aggregate volatility by adding a forward looking lens; a feasible notion of benchmark and a counterfactual, all essential elements of a vulnerability framework.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Sapienza University of Rome, DISS in its series Working Papers with number 3/10.

in new window

Date of creation: Jan 2010
Handle: RePEc:saq:wpaper:3/10
Contact details of provider: Postal:
Piazzale Aldo Moro, 5 - 00184 ROMA

Phone: +39+06491914 (int. 20563)
Fax: +39+06491914 (int. 20563)
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:saq:wpaper:3/10. 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: (Pierluigi Montalbano)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.