Domestic demand and global production in the Eurozone: A multi-regional input-output assessment of the global crisis

Nadia Garbellini, Enrico Marelli and Ariel Wirkierman

International Review of Applied Economics, 2014, vol. 28, issue 3, 336-364

Abstract: This paper studies the effects of domestic and foreign demand impulses in euro area economies following the Great Recession of 2008--2009 and the Eurozone crisis of 2011--2012. Using a global Input--Output framework we apply a set of metrics to assess spillover effects of international trade in intermediates triggered by the dynamics of final demand. Our findings suggest that while cross-country trade spillovers have played a crucial role during the Great Recession, they have had a moderate impact when compared with the role of domestic sources of final demand during the Eurozone crisis. Hence, a strategy of coordinated fiscal austerity cannot be sustained by empirical evidence.

Date: 2014
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DOI: 10.1080/02692171.2013.872086

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