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Volatility and diversification of exports: firm-level theory and evidence

Vannoorenberghe, Gonzague; Wang, Zheng; Yu, Zhihong


Gonzague Vannoorenberghe

Zheng Wang

Zhihong Yu


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.


Vannoorenberghe, G., Wang, Z., & Yu, Z. (2016). Volatility and diversification of exports: firm-level theory and evidence. European Economic Review, 89(October), 216-247.

Journal Article Type Article
Acceptance Date Jul 7, 2016
Online Publication Date Jul 25, 2016
Publication Date 2016-10
Deposit Date Jul 12, 2016
Publicly Available Date Jul 27, 2018
Journal European economic review
Print ISSN 0014-2921
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 89
Issue October
Pages 216-247
Keywords Volatility; Diversification; Exports
Public URL
Publisher URL
Copyright Statement ©2018, Elsevier. This manuscript version is made available under the CC-BY-NC-ND 4.0 license
Additional Information This is the accepted manuscript of an article published in European economic review, 2016. The version of record is available at the DOI link in this record.


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