Export characteristics and output volatility: comparative firm-level evidence for CEE countries

The literature shows that openness to trade improves long-term growth but also that it may increase exposure to high output volatility. In this vein, our paper investigates whether exporting and export diversification at the firm level have an effect on the output volatility of firms. We use large r...

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Bibliographic Details
Published in:Review of world economics 2018-05, Vol.154 (2), p.347-376
Main Authors: Čede, Urška, Chiriacescu, Bogdan, Harasztosi, Péter, Lalinsky, Tibor, Meriküll, Jaanika
Format: Article
Language:English
Subjects:
Comparative studies
Diversification
Economic Policy
Economic theory
Economics
Economics and Finance
European Integration
Exports
Global economy
International Economics
Macroeconomics/Monetary Economics//Financial Economics
Markets
Openness
Original Paper
Recessions
Sales
Trade
Volatility
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Summary:The literature shows that openness to trade improves long-term growth but also that it may increase exposure to high output volatility. In this vein, our paper investigates whether exporting and export diversification at the firm level have an effect on the output volatility of firms. We use large representative firm-level databases from Estonia, Hungary, Romania, Slovakia and Slovenia over the last boom-bust cycle in 2004-2012. The results confirm that exporting is related to higher volatility at the firm level. There is also evidence that this effect increased during the Great Recession due to the large negative shocks in export markets. We find that export diversification mitigates volatility only in some cases. Exporting more products or serving more markets does not necessarily result in higher stability of firm sales.
ISSN:1610-2878
1610-2886
DOI:10.1007/s10290-018-0312-x