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Trade liberalization and volatility: Evidence from Indian firms

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  • Asha Sundaram

Abstract

I look at the impact of trade liberalization on sales growth volatility of firms. Exploiting India’s externally imposed trade reform to identify trade liberalization effects, I find that while a fall in the tariff on the final product produced by the firm is associated with an increase in volatility in Indian manufacturing firms, a fall in the tariff on intermediate inputs is associated with a decrease in volatility, with the latter effect dominating the former. I hence propose an additional channel for gains from trade liberalization to the ones documented in the literature.

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  • Asha Sundaram, 2019. "Trade liberalization and volatility: Evidence from Indian firms," Review of International Economics, Wiley Blackwell, vol. 27(5), pages 1409-1426, November.
    • Handle: RePEc:bla:reviec:v:27:y:2019:i:5:p:1409-1426
    DOI: 10.1111/roie.12429
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    Cited by:

    1. Essotanam Mamba & Afi Balaki, 2022. "Effects of trade policies on external trade performances of ECOWAS countries (1996–2017)†," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(3), pages 535-566, July.
    2. Horst Raff & Nicolas Schmitt & Frank Stähler, 2018. "How Importers May Hedge Demand Uncertainty," Discussion Papers dp18-03, Department of Economics, Simon Fraser University.

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