Propagation of economic shocks in input-output networks: A cross-country analysis

Martha G. Alatriste Contreras and Giorgio Fagiolo ()
Additional contact information
Martha G. Alatriste Contreras: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: This paper investigates how economic shocks propagate and amplify through the input-output network connecting industrial sectors in developed economies. We study alternative models of diffusion on networks and we calibrate them using input-output data on real-world inter-sectoral dependencies for several European countries before the Great Depression. We show that the impact of economic shocks strongly depends on the nature of the shock and country size. Shocks that impact on final demand without changing production and the technological relationships between sectors have on average a large but very homogeneous impact on the economy. Conversely, when shocks change also the magnitudes of input-output across-sector interdependencies (and possibly sector production), the economy is subject to predominantly large but more heterogeneous avalanche sizes. In this case, we also find that (i) the more a sector is globally central in the country network, the larger its impact; (ii) the largest European countries, such as those constituting the core of the European Union's economy, typically experience the largest avalanches, signaling their intrinsic higher vulnerability to economic shocks.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2014-12
References: Add references at CitEc
Citations: View citations in EconPapers (35)

Published in Physical Review E , 2014, 90 (6), pp.062812. ⟨10.1103/PhysRevE.90.062812⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Propagation of Economic Shocks in Input-Output Networks: A Cross-Country Analysis (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01474258

DOI: 10.1103/PhysRevE.90.062812

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().