Trade Openness and Volatility



Table 1. Volatility of Annual Output Growth per Worker: Cross-Sectional Results

(1)         (2)         (3)         (4)

Trade/Output

0.250**

0.270**

0.200**

0.160**

(0.025)

(0.030)

(0.020)

(0.028)

Output per worker

0.022

-0.474**

0.361**

0.019

(0.039)

(0.053)

(0.033)

(0.048)

Observations

1518

1518

1518

1518

R2

0.065

0.240

0.620

0.712

μc

no

no

yes

yes

μi___________________

no

yes

no

yes

Notes: Robust standard errors in parentheses. + significant at 10%; * significant at 5%; ** significant at 1%. The
sample period is 1970-99. The dependent variable is the log variance of the growth rate of output per worker, 1970-
99. All regressors are in natural logs, trade/output is the period average, and output per worker is the period’s initial
value.
μc denotes the country fixed effects. μi denotes the sector fixed effects. All specifications are estimated using
OLS.

Table 2. Volatility of Annual Output Growth per Worker: Panel Results

(1)

(2)

(3)

(4)

(5)

(6)

(7)

Trade/Output

0.191**

0.195**

0.156**

0.148**

0.131**

0.192**

0.093**

(0.015)

(0.018)

(0.014)

(0.018)

(0.018)

(0.020)

(0.027)

Output per worker

-0.058*

-0.633**

0.290**

-0.013

0.036

0.009

-0.210**

(0.028)

(0.041)

(0.026)

(0.043)

(0.043)

(0.043)

(0.070)

Observations

4287

4287

4287

4287

4287

4287

4287

R2

0.049

0.183

0.422

0.486

0.580

0.498

0.672

μt

yes

yes

yes

yes

no

no

yes

μc

no

no

yes

yes

yes

no

no

μi

no

yes

no

yes

no

yes

no

μc × μi

no

no

no

no

no

no

yes

μc × μt

no

no

no

no

no

yes

no

μi × μt

no

no

no

no

yes

no

no

Notes: Robust standard errors in parentheses. + significant at 10%; * significant at 5%; ** significant at 1%. The
sample period is 1970-99. The dependent variable is the log variance of the growth rate of output per worker over
ten-year periods: 1970-79, 1980-89, 1990-99. All regressors are in natural logs, trade/output is averaged over the
ten-year periods, and output per worker is the ten-year period’s initial value.
μc denotes the country fixed effects.
μi denotes the sector fixed effects. All specifications are estimated using OLS.

24



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