Industries on the edge: The most exposed sectors to microeconomic shocks

Girish Bahal and Damian Lenzo

Economics Letters, 2023, vol. 232, issue C

Abstract: We propose a measure of industries’ direct and indirect exposure to microeconomic TFP shocks that originate from any sector of the economy. We show that sectors that rely heavily on intermediate inputs from other industries are more vulnerable to such shocks. In a sample of 43 countries, we find that industries with higher shock exposure experienced significantly greater output volatility between 2000 and 2014, highlighting the importance of input–output linkages in driving microeconomic output volatility. During this period, sectors such as refined petroleum product manufacturing, warehousing, and electricity & gas supply were among the most exposed to shocks.

Keywords: Production networks; Propagation of sector-level shocks; Microeconomic volatility (search for similar items in EconPapers)
JEL-codes: D24 D5 D57 E23 E32 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:232:y:2023:i:c:s0165176523003725

DOI: 10.1016/j.econlet.2023.111347

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