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Not All Shocks Are Shared Equally : Commodity Exporters and International Risk Sharing

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  • Luttini, Emiliano Evaristo
  • Mekonnen, Dawit Kelemework
  • Mercer-Blackman, Valerie
  • Sorensen, Bent

Abstract

Using world commodity prices as an instrument, this paper proposes a novel method for decomposing channels of international risk sharing for commodity-exporting countries. The method identifies the commodity “sector”' as the projection of gross national product growth on commodity-price growth, and the non-commodity “sector”' as its orthogonal complement. The findings show that commodity-price-induced risk is shared significantly more than other risks, in particular via pro-cyclical government savings, but also via counter-cyclical net international factor income.

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  • Luttini, Emiliano Evaristo & Mekonnen, Dawit Kelemework & Mercer-Blackman, Valerie & Sorensen, Bent, 2026. "Not All Shocks Are Shared Equally : Commodity Exporters and International Risk Sharing," Policy Research Working Paper Series 11297, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11297
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    1. Luttini, Emiliano Evaristo & Mekonnen, Dawit Kelemework & Mercer-Blackman, Valerie & Sorensen, Bent, 2026. "How Much Do Commodity Exporters Share Risk ?," Policy Research Working Paper Series 11296, The World Bank.

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