Abstract
We show using detailed firm-level Chinese data that, among small exporters, firms selling, to a more diversified set of countries have more volatile exports, while the opposite holds among large exporters. This a priori surprising result for small firms is robust to a wide array of specifications and controls. Our theoretical explanation for these observations rests on the presence of fixed costs of exports per destination and short-run demand shocks. In this setup, the volatility of a firm's exports depends not only on the diversification of its destination portfolio but also, on whether it exports permanently to all markets. Among small exporters, a more diversified pool of destinations makes the firm more likely to export occasionally to some markets, thereby raising export volatility. (C) 2016 Elsevier B.V. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 216-247 |
| Journal | European Economic Review |
| Volume | 89 |
| DOIs | |
| Publication status | Published - Oct 2016 |
Keywords
- Volatility
- Diversification
- Exports
Cite this
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Volatility and diversification of exports : Firm-level theory and evidence. / Vannoorenberghe, Gonzague; Wang, Zheng; Yu, Zhihong.
In: European Economic Review, Vol. 89, 10.2016, p. 216-247.Research output: Contribution to journal › Article › Scientific › peer-review
TY - JOUR
T1 - Volatility and diversification of exports
T2 - Firm-level theory and evidence
AU - Vannoorenberghe, Gonzague
AU - Wang, Zheng
AU - Yu, Zhihong
PY - 2016/10
Y1 - 2016/10
N2 - We show using detailed firm-level Chinese data that, among small exporters, firms selling, to a more diversified set of countries have more volatile exports, while the opposite holds among large exporters. This a priori surprising result for small firms is robust to a wide array of specifications and controls. Our theoretical explanation for these observations rests on the presence of fixed costs of exports per destination and short-run demand shocks. In this setup, the volatility of a firm's exports depends not only on the diversification of its destination portfolio but also, on whether it exports permanently to all markets. Among small exporters, a more diversified pool of destinations makes the firm more likely to export occasionally to some markets, thereby raising export volatility. (C) 2016 Elsevier B.V. All rights reserved.
AB - We show using detailed firm-level Chinese data that, among small exporters, firms selling, to a more diversified set of countries have more volatile exports, while the opposite holds among large exporters. This a priori surprising result for small firms is robust to a wide array of specifications and controls. Our theoretical explanation for these observations rests on the presence of fixed costs of exports per destination and short-run demand shocks. In this setup, the volatility of a firm's exports depends not only on the diversification of its destination portfolio but also, on whether it exports permanently to all markets. Among small exporters, a more diversified pool of destinations makes the firm more likely to export occasionally to some markets, thereby raising export volatility. (C) 2016 Elsevier B.V. All rights reserved.
KW - Volatility
KW - Diversification
KW - Exports
U2 - 10.1016/j.euroecorev.2016.07.002
DO - 10.1016/j.euroecorev.2016.07.002
M3 - Article
VL - 89
SP - 216
EP - 247
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
ER -