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An index of static resilience in interindustry economics

Author

Listed:
  • Betty Agnani

    (Department of Economic Theory and Economic History, Universidad de Granada)

  • Ana Isabel Guerra

    (Department of International Economics, Universidad de Granada)

  • Ferran Sancho

    (Department of Economics, Universitat Autònoma de Barcelona,)

Abstract

We introduce a novel static indicator of economy-wide resilience that captures the ability of an economy to adjust and recover from a negative shock from either the demand or the supply side. The metric is counterfactual and reveals by simulation the extent of the adjustments that would keep total income at least at the initial pre-shock level while maintaining the initial economic structure. The larger the scale of the needed adjustments in response to the shock, the smaller is the resilience of the economic system. The methodology we propose for this appraisal relies on the concept of constrained input-output multipliers embedded within a linear programming problem. We show the applicability of our approach by calculating and comparing demand and supply resilience indices for a group of ten large OECD economies. For all these economies, the results show that manufacturing industries are more resilient than services sectors and that economic resilience regarding negative supply shocks is higher than demand shocks.

Suggested Citation

  • Betty Agnani & Ana Isabel Guerra & Ferran Sancho, 2023. "An index of static resilience in interindustry economics," ThE Papers 23/09, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:23/09
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    demand resilience; supply resilience; static economic resilience; constrained inputoutput multipliers; endogenous scaling.;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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