An index of static resilience in interindustry economics

Ferran Sancho, Ana-Isabel Guerra and Betty Agnani

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We introduce a novel static indicator of economy-wide resilience that captures the ability of an economy to adjust and recover from a negative shock from either the demand or the supply side. The metric is counterfactual and reveals by simulation the extent of the adjustments that would keep total income at least at the initial pre-shock level while maintaining the initial economic structure. The larger the scale of the needed adjustments in response to the shock, the smaller is the resilience of the economic system. The methodology we propose for this evaluation uses the concept of constrained input-output multipliers which in turn are incorporated within a linear programming problem. We show the applicability of this approach by calculating and comparing demand and supply resilience indices for a group of ten large OECD economies. For all these economies, the results show that manufacturing industries are more resilient than services sectors and that economic resilience regarding negative supply shocks is higher than demand shocks.

Keywords: demand resilience; supply resilience; static economic resilience; constrained input- output multipliers; endogenous scaling. (search for similar items in EconPapers)
JEL-codes: C67 D57 O57 (search for similar items in EconPapers)
Pages: 38
Date: 2023-07-06
New Economics Papers: this item is included in nep-hme
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Related works:
Journal Article: An index of static resilience in interindustry economics (2024)
Working Paper: An index of static resilience in interindustry economics (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:972.23

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