Skip to Main content Skip to Navigation
Journal articles

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

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.
Complete list of metadatas

https://hal-amu.archives-ouvertes.fr/hal-01474258
Contributor : Elisabeth Lhuillier <>
Submitted on : Wednesday, February 22, 2017 - 4:16:30 PM
Last modification on : Wednesday, August 5, 2020 - 3:16:48 AM

Links full text

Identifiers

Collections

Citation

Martha G. Alatriste Contreras, Giorgio Fagiolo. Propagation of economic shocks in input-output networks: A cross-country analysis. Physical Review E , American Physical Society (APS), 2014, 90 (6), pp.062812. ⟨10.1103/PhysRevE.90.062812⟩. ⟨hal-01474258⟩

Share

Metrics

Record views

227