Sectoral slowdowns in the UK: Evidence from transmission probabilities and economic linkages

Eva Janssens and Robin Lumsdaine
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Eva Janssens: University of Amsterdam
Robin Lumsdaine: Erasmus University Rotterdam

No 21-027/III, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper studies shock transmission across macroeconomic sectors in the UK, using data from the Bank of England's Flow of Funds statistics. We combine two different approaches to quantify the spread of shocks to assess whether sectors with large bilateral economic linkages as measured through network data have a greater statistical likelihood of shock transmission between them. The combination of both approaches reveals the Monetary Financial Institutions sector's role as shock absorber, and identifies the most important channels of shock transmission. The inferential discrepancies between network data and the actual spillovers highlight the contribution of the proposed methodology.

Keywords: Flow of Funds; contagion; epidemiology; intersectoral networks; Gibbs sampling; Bayesian priors (search for similar items in EconPapers)
JEL-codes: E01 E32 E37 G01 (search for similar items in EconPapers)
Date: 2021-04-05
New Economics Papers: this item is included in nep-mac and nep-net
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20210027

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