Shocks in a highly interlinked global economy

Christine Arriola, Przemyslaw Kowalski and Frank van Tongeren

No 283, OECD Trade Policy Papers from OECD Publishing

Abstract: This report analyses the broad risks associated with sectoral output disruptions both domestically and abroad, examining several exposure metrics. The results indicate that domestic shocks generally have larger sectoral impacts than foreign shocks. In most cases, foreign production disruptions cause minimal domestic output responses, suggesting that domestic and international linkages, along with economic adjustment mechanisms, tend to dampen rather than amplify foreign shocks. However, a cumulation of adverse shocks can significantly affect specific sectors, with manufacturing sectors are on average much more exposed to foreign output shocks than services and agrifood given their greater internationalisation of output and inputs. Economies with strong backward and forward global value chain links to major foreign economies also tend to be more exposed to foreign shocks.

Keywords: CGE; Exposure risk; Global Value Chains; GVCs; METRO Model; Shock transmission; Supply Chains (search for similar items in EconPapers)
JEL-codes: C68 F14 (search for similar items in EconPapers)
Date: 2024-06-26
New Economics Papers: this item is included in nep-ifn, nep-int and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:283-en

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