Volatility and diversification of exports: Firm-level theory and evidence

Gonzague Vannoorenberghe*, Zheng Wang, Zhihong Yu

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

37 Citations (Scopus)


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 languageEnglish
Pages (from-to)216-247
JournalEuropean Economic Review
Publication statusPublished - Oct 2016


  • Volatility
  • Diversification
  • Exports


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