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International input-output linkages and exogenous shock transmission: a simple model

Author

Listed:
  • Ben Shepherd

    (Principal, Developing Trade Consultants)

Abstract

This paper develops a simple model of shock transmission through an input-output network. The impact of a negative shock on distant nodes is related to the eigenvector centrality scores of those nodes. This finding is independent of production technology, and flows only from the structure of the network. Econometric models using data from the 2008-2009 Financial Crisis lend strong support to the model: centrality has a significant, negative impact on output changes following the crisis. Network structure, covering interlinkages among all sectors of the economy, not just the locus of a shock, therefore has a significant impact on propagation.

Suggested Citation

  • Ben Shepherd, 2018. "International input-output linkages and exogenous shock transmission: a simple model," Economics Bulletin, AccessEcon, vol. 38(4), pages 2362-2370.
    • Handle: RePEc:ebl:ecbull:eb-18-00392
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I4-P215.pdf
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    References listed on IDEAS

    as
    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    2. V. Kandiah & H. Escaith & D. L. Shepelyansky, 2015. "Contagion effects in the world network of economic activities," Papers 1507.03278, arXiv.org.
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    Cited by:

    1. Valeriy Kozytskyy & Marianna Oliskevych & Galyna Beregova & Nelya Pabyrivska, 2023. "Output and Energy Prices Fluctuations in Response to Market Shocks: System Dynamic Modeling," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 462-466, March.

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    More about this item

    Keywords

    Networks; Centrality; Global Financial Crisis; Input-Output.;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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