Exposure to External Country Specific Shocks and Income Volatility

23 Pages Posted: 22 Feb 2009

See all articles by Marion Jansen

Marion Jansen

International Trade Centre

Carolina Lennon

Université Paris I Panthéon-Sorbonne

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2009

Abstract

Using a dataset of 138 countries over a period from 1966 to 2004, this paper analyses the relevance of country specific shocks for income volatility in open economies. We show that exposure to country specific shocks has a positive and significant impact on GDP volatility. In particular, we find that the degree to which the cycles of different trading partners are correlated is more important in explaining exporters' GDP volatility than the volatility of demand in individual export market. We also show that geographical diversification is a significant determinant of countries' exposure to country specific shocks.

Keywords: income volatility, geographical export diversification, external shocks

JEL Classification: C23, F43, O19

Suggested Citation

Jansen, Marion and Lennon, Carolina and Piermartini, Roberta, Exposure to External Country Specific Shocks and Income Volatility (January 1, 2009). Available at SSRN: https://ssrn.com/abstract=1344994 or http://dx.doi.org/10.2139/ssrn.1344994

Marion Jansen (Contact Author)

International Trade Centre ( email )

54-56 Rue de Montbrillant
Geneva
Switzerland

Carolina Lennon

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland
+41 22 739 5492 (Phone)
+41 22 739 5762 (Fax)

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