Author ORCID Identifier
Year of Publication
Doctor of Philosophy (PhD)
Business and Economics
Dr. Josh Ederington
My dissertation consists of three essays on export earnings volatility. In the first essay, I look at the determinants of export earnings volatility. The four main determinants suggested by the theoretical literature are export concentration, durability, vertical linkages, and financial vulnerability. A panel of bilateral trade data at the industry level, containing 178 exporting countries, 194 importing countries, and 590 SITC Rev. 1 four-digit industries from 1962 to 2011, is used and these aspects are incorporated to empirically examine their effects on export earnings volatility. The essay finds that diversifying exports across different industries and trade partners plays an important role in reducing aggregate export instability. Moreover, exports of durable goods and intermediate inputs exhibit higher volatility. Unlike its role in explaining the Great Trade Collapse, industry financial vulnerability does not affect the export earnings volatility of developed countries. However, trade credit reliance and asset tangibility matter in the export instability of developing countries which have weaker financial institutions and contractibility.
The second essay is joint work with Dr. Ederington and Dr. Minier. Given that a frequently stated objective of regional and multilateral trade agreements is to stabilize and reduce volatility in trade flows, we examine whether trade agreements accomplish this goal. Using a structural gravity approach we identify two potential channels through which international trade institutions may influence the volatility of bilateral trade flows: by affecting the variance of trade barriers and by affecting the covariance of economic outcomes between the trading partners. We then use a panel of bilateral industry-level trade data to empirically examine the effects of regional trade agreements and GATT/WTO membership on export earnings volatility. We find that joining a multilateral trade agreement such as the GATT does make export earnings more stable. However, we find that signing a regional trade agreement actually raises instability in bilateral exports and that this rise in volatility increases as the trading partners become more integrated.
The third essay is an empirical study of the effects of export concentration on the Great Trade Collapse. First, it finds that country pairs whose exports are concentrated on a small number of products experienced greater reductions in bilateral exports. Second, it is the first to look at the relationship between trade flows and trade finance availability as a function of export concentration. Using bilateral trade data, the essay finds that the relationship between the fall in bilateral exports and the fall in the availability of trade finance, proxied by insured export credits, is more dramatic when exports are concentrated on few products. Similarly, using export data at the HS 2002 six-digit product level, the essay finds the relationship between the fall in product exports and financial vulnerability, specifically external finance dependence and asset tangibility, to be more intense when exports are concentrated on few trading partners. This result implies that exporter-importer (exporter-product) pairs whose exports are more diversified across different products (markets) may be less susceptible to financial shocks.
Digital Object Identifier (DOI)
Han, Yoonseon, "Three Essays on Export Earnings Volatility" (2021). Theses and Dissertations--Economics. 54.