This paper shows that volatility induces adverse first order welfare effects in countries excluded from the global … volatility. We identify the parameters determining the magnitude of the loss -- it is proportional to the autocorrelation of … shocks, to volatility (as measured by the standard deviation of shocks), and to the degree of product differentiation (as …

This paper proposes a new mechanism by which country size and international trade affect macroeconomic volatility. We … firms have an impact on aggregate output volatility. We explore the quantitative properties of the model calibrated to data … for the 50 largest economies in the world. Smaller countries have fewer firms, and thus higher volatility. The model …