How geographical diversification of imported inputs affects industrial output volatility?

Details

Supervisors

Vannoorenberghe, Gonzague

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

The main purpose of this thesis is to understand whether a higher geographical diversification of imports of intermediate goods represents an additional source of risk and instability for the economy or if, on the contrary, it could be seen as a tool for lowering macroeconomic uncertainty. I would try to address this question analysing the relationship between input diversification and output growth volatility at the industrial level. The results suggest that there is a positive relation between output growth volatility and geographical diversification of imported inputs, implying that diversification of input could be seen as a tool to lower output instability. Moreover, from the results it is clear that trade openness positively affects output volatility. This means that even if trade could have favor macroeconomic uncertainty diversification of inputs could help reducing it.