Volatility in the small and in the large: The lack of diversification in international trade
Journal of International Economics, Volume 122, January 2020, 103276, 15 décembre 2019, Julien Frédéric Martin
Volatility in the small and in the large: The lack of diversificationin international trade ☆Francis Kramarz (CREST-ENSAE and CEPR, Palaiseau, France), Julien Martin (Université du Québec à Montréal, CREST, and CEPR, Quebec, Canada), Isabelle Mejean (Ecole Polytechnique and CEPR, Palaiseau, France) Abstract How does international trade affect the risk exposure of firms and countries? Trade induces specialization, thus increasing economies’ exposure to idiosyncratic supply shocks. But greater geographic diversification in trade destinations offers natural hedging properties against demand shocks. In this paper, we offer an integrated economic and econometric view of the impact of trade on firms and countries volatility. Exporters’ volatility is shown to directly depend on the (lack of) diversification in their portfolio of clients. Indeed, most exporters, including the largest, have one or two main clients that dwarf the others. This structure of trade networks implies that individual exporters are strongly exposed to microeconomic demand shocks. The concentration of trade flows further implies that such risk does not wash out across firms, thus contributing to aggregate fluctuations. Pour lire l’article intégral, veuillez consulter le site internet de Science direct ou la pièce jointe. Également à lire, et des mêmes auteurs, une tribune sur VoxEU en lien avec cet article : https://voxeu.org/article/idiosyncratic-risks-and-volatility-trade
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Julien Frédéric Martin, Responsable, Développement économique et inégalités des territoires (DEIT)Produit par
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