Does trade openness increase firm-level volatility?

Harald Strotmann (), Jörg Döpke and Claudia Buch

No 2006,40, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: From a theoretical point of view, greater trade openness affects firm-level volatility by changing the exposure and the reaction of firms to macroeconomic shocks. The net effect is ambiguous, though. This paper provides firm-level evidence on the link between openness and volatility. Using two novel datasets on German firms, we analyze the evolution of firm-level output volatility and the link between volatility and trade openness. We find that firm-level output volatility displays patterns similar to those found in aggregated data for Germany. Also, smaller firms and firms that grow faster are more volatile. Increased trade openness tends to lower volatility.

Keywords: firm-level volatility; trade openness (search for similar items in EconPapers)
JEL-codes: E32 F41 G15 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec, nep-int and nep-mac
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp1:5168

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