A widely held view is that openness to international trade leads to higher GDP volatility, as trade increases … important, openness to international trade can lower GDP volatility by reducing exposure to domestic shocks and allowing … importance of the two mechanisms (sectoral specialization and cross-country diversification) and provide a new answer to the …

A widely held view is that openness to international trade leads to higher GDP volatility, as trade increases … important, openness to international trade can lower GDP volatility by reducing exposure to domestic shocks and allowing … importance of the two mechanisms (sectoral specialization and cross-country diversification) and provide a new answer to the …

Why is GDP so much more volatile in poor countries than in rich ones? To answer this question, we propose a theory of … technological diversification. Production makes use of different input varieties, which are subject to imperfectly correlated shocks …. In our model, the expansion in the number of varieties provides diversification benefits against variety-specific shocks …

We analyze how trade affects aggregate volatility using a multi-country, multiindustry, and multi-destination framework … covariances). We then use this framework to run counterfactuals changing the degree of destination market diversification …, we find that the effect of increased destination market diversification is quantitatively important in reducing aggregate …