Trade Openness, Economic Size, and Macroeconomic Volatility
Trade Openness, Economic Size, and Macroeconomic Volatility: Theory and Empirical Evidence
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제21권 제2호
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2006.06254 - 272 (19 pages)
- 3

The effects of trade openness on macroeconomic volatility are theoretically ambiguous, so the issue must be resolved empirically. Most of the empirical evidence, however, has been mixed and inconclusive. This paper investigates the question using two data sets: one of 56 countries over 1951-1998, and another of 105 countries over 1960-1997. It is shown that, when their effects are jointly estimated, both economic size and trade openness have a sizable, negative, and generally statistically significant effect on the variability of output, consumption, investment, and the exchange rate. It is also found that depreciation rates are inversely related to both economic size and openness. These effects are robust across the two data sets and three different detrending methods.
Ⅰ. Introduction
Ⅱ. A Simple Theoretical Model
Ⅲ. Data Sources and Definitions
Ⅳ. Empirical Evidence
Ⅴ. Discussion and Conclusions
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