An index of static resilience in interindustry economics

Betty Agnani, Ana Isabel Guerra () and Ferran Sancho
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Ana Isabel Guerra: Department of International Economics, Universidad de Granada

No 23/09, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

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 appraisal relies on the concept of constrained input-output multipliers embedded within a linear programming problem. We show the applicability of our 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 inputoutput multipliers; endogenous scaling. (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023-07-10
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http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers23_09.pdf (application/pdf)

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:gra:wpaper:23/09

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