Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175520
Authors: 
Ardelean, Adina
León-Ledesma, Miguel A.
Puzzello, Laura
Year of Publication: 
2017
Series/Report no.: 
School of Economics Discussion Papers 1709
Abstract: 
We develop an empirical framework that allows us to account for producer-country, industry, and demand shocks as drivers of volatility at the industry level in open economies. Our methodology separately accounts for demand shocks originating in the home and foreign markets. Using a panel of manufacturing and trade data, our findings suggest that, independent of the level of aggregation, output volatility is driven primarily by shocks originating in the destination markets for an industry's sales (demand shocks) including home markets. Further, we show that industries more open to trade are more volatile because intra-industry imports increase the uncertainty of 1) domestic demand, and 2) production through greater exposure to foreign shocks.
Subjects: 
Output Volatility
Demand Shocks
Trade
Industry-level Data
JEL: 
F15
F44
F61
Document Type: 
Working Paper
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