Trade Openness and Volatility



Table 9. Cross-Country and Cross-Decade Impacts of Changes in Openness

Sample

____________________________Effect____________________________

Sector Volatility

Comovement

Specialization

Total

Full

σA2

σA2 A2

0.0009

0.1016

-0.0003

-0.0389

0.0011

0.1281

0.0016

0.1908

Developed
σA2
σA2 A2

0.0003

0.2432

-0.0001

-0.0945

0.0003

0.2517

0.0005

0.4005

Developing
σA2
σA2 A2

0.0012

0.1367

-0.0004

-0.0503

0.0018

0.1971

0.0025

0.2834

1970s
σA2
σA2 A2

0.0008

0.0717

-0.0004

-0.0369

0.0005

0.0451

0.0009

0.0799

1980s
σA2
σA2 A2

0.0007

0.0909

-0.0007

-0.0837

0.0008

0.1045

0.0009

0.1118

1990s
σA2
σA2 A2

0.0013

0.1865

-0.0007

-0.1015

0.0013

0.1918

0.0019

0.2767

Notes: This table reports the estimated change in aggregate volatility, in absolute terms (∆σA2 ), and relative to the
average aggregate volatility in the sample (∆
σA2 A2 ). The first three columns report the individual effects, and the
last column the combined effect. The trade opening used in this table is equivalent to moving from the 25
th to 75th
percentile of trade openness in the sample.

30



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