Browsing by Author "Vannoorenberghe, Gonzague"

Now showing 1 - 1 of 1
  • No Thumbnail Available
    ItemMetadata only
    Volatility and diversification of exports: Firm-level theory and evidence
    (Elsevier, 2016-07-25) Vannoorenberghe, Gonzague; Wang, Zheng; Yu, Zhihong
    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.