Does Openness Imply Greater Exposure?

External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the...

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Main Authors:	Calderón, César, Loayza, Norman, Schmidt-Hebbel, Klaus
Format:	Publications & Research
Language:	English
Published:	World Bank, Washington, DC 2012
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6318232/openness-imply-greater-exposure http://hdl.handle.net/10986/8645

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recordtype	oai_dc
spelling	okr-10986-86452021-04-23T14:02:43Z Does Openness Imply Greater Exposure? Calderón, César Loayza, Norman Schmidt-Hebbel, Klaus External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth and volatility effects of outcome measures of trade and financial integration, as well as four types of foreign shocks: terms of trade changes, trading partners' growth rates, international real interest rate changes, and net regional capital inflows. The paper analyzes the possibility of nonlinearities by allowing the growth and volatility effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks depend on the degree of trade and financial integration. The findings point toward strong non-monotonic effects of openness and external shocks on growth and volatility. Moreover, all in all, the results contradict the view that international integration increases external vulnerability by hurting growth and increasing volatility or by amplifying the adverse effect of external shocks. 2012-06-21T15:35:58Z 2012-06-21T15:35:58Z 2005-10 http://documents.worldbank.org/curated/en/2005/10/6318232/openness-imply-greater-exposure http://hdl.handle.net/10986/8645 English Policy Research Working Paper; No. 3733 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
relation	Policy Research Working Paper; No. 3733
description	External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth and volatility effects of outcome measures of trade and financial integration, as well as four types of foreign shocks: terms of trade changes, trading partners' growth rates, international real interest rate changes, and net regional capital inflows. The paper analyzes the possibility of nonlinearities by allowing the growth and volatility effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks depend on the degree of trade and financial integration. The findings point toward strong non-monotonic effects of openness and external shocks on growth and volatility. Moreover, all in all, the results contradict the view that international integration increases external vulnerability by hurting growth and increasing volatility or by amplifying the adverse effect of external shocks.
format	Publications & Research
author	Calderón, César Loayza, Norman Schmidt-Hebbel, Klaus
spellingShingle	Calderón, César Loayza, Norman Schmidt-Hebbel, Klaus Does Openness Imply Greater Exposure?
author_facet	Calderón, César Loayza, Norman Schmidt-Hebbel, Klaus
author_sort	Calderón, César
title	Does Openness Imply Greater Exposure?
title_short	Does Openness Imply Greater Exposure?
title_full	Does Openness Imply Greater Exposure?
title_fullStr	Does Openness Imply Greater Exposure?
title_full_unstemmed	Does Openness Imply Greater Exposure?
title_sort	does openness imply greater exposure?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/10/6318232/openness-imply-greater-exposure http://hdl.handle.net/10986/8645
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Does Openness Imply Greater Exposure?

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