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We analytically characterize the aggregate productivity loss from allocative distortions in a setting that accounts for the sectoral linkages of production. We show that the effects of distortions and the role of sectoral linkages depend crucially on how substitutable inputs are. We find that the productivity loss is smaller if input substitutability is low. Moreover, with low input substitutability, sectoral linkages do not systematically amplify the effects of distortions. In addition, the impact of the sectors that supply intermediate inputs becomes smaller. We quantify these effects in the context of the distortions caused by market power, using industry-level data for 35 countries. With our benchmark calibration, which accounts for low input substitutability, the median aggregate productivity loss from industry-level markups is 1.3%. To assume instead unit elasticities of substitution (i.e., to use a Cobb-Douglas production function) would lead to overestimating the productivity loss by a factor of 1.8. Sectoral linkages do amplify the cost of markups, but the amplification factor is considerably weaker than with unit elasticities.

El objetivo principal de esta investigación es la generación de la Matriz Insumo Producto Regional y la identificación de los sectores determinantes para el Estado de Durango. Lo anterior se lleva a cabo mediante la metodología indirecta de Flegg y Weber (1997) para determinar las relaciones intersectoriales regionales, a partir de un ajuste sobre los coeficientes de ubicación cruzada de la Matriz de Insumo Producto Nacional (MIPN) 2013. Este análisis muestra como sectores clave:1) Generación, transmisión y distribución de suministro de energía eléctrica, agua y gas; 2) Servicios financieros y de seguros, 3) Información en los medios de comunicación, entre otros. En estudios regionales similares, el parámetro de ajuste es determinado a priori, por lo que una recomendación es la de estimar el valor adecuado para cada región. La principal limitación es el uso de MIPN, que son publicadas cada 5 años, lo que implica que la herramienta realiza un análisis estático, sin embargo, esto puede solventarse mediante pronósticos basados en metodologías para la actualización de los coeficientes técnicos. Hasta donde tenemos conocimiento, somos los primeros en realizar un análisis sobre los sectores productivos del estado de Durango y de implementar un proceso de optimización sobre el parámetro de ajuste. Los resultados de la clasificación concuerdan con la realizada a partir del Censo Económico y los Valores Agregados Brutos Estatales de los sectores que se encuentran en INEGI.

Since the beginning of the 2008 economic crisis, economic growth and development have been in the forefront of economic research. In a global context, the highest levels of poverty as well as malnutrition problems are found in sub-Saharan African countries. Social Accounting Matrices (SAMs) are useful tools to describe the economic situation of these countries, the interactions among economic agents and to support policymakers in implementing their policies. The paper shows the macro- and micro-economic indicators of Kenya, which can be directly extracted from the described SAM 2017 for Kenya The analysis of the SAM multipliers shows that agri-food multipliers are in general above the average reflecting the strength of backward and forward linkages of Kenya’s economy.

In the absence of data on the destination industry of international trade flows most multi-regional input-output (MRIO) tables are based on the import proportionality assumption. Under this assumption imported commodities are proportionally distributed over the target sectors (individual industries and final demand categories) of an importing region. Here, we quantify the uncertainty arising from the import proportionality assumption on the four major environmental footprints of the different regions and industries represented in the MRIO database EXIOBASE. We randomise the global import flows by applying an algorithm that randomly assigns imported commodities block-wise to the target sectors of an importing region, while maintaining the trade balance. We find the variability of the national footprints in general below a coefficient of variation (CV) of 4%, except for the material, water and land footprints of highly trade-dependent and small economies. At the industry level the variability is higher with 25% of the footprints having a CV above 10% (carbon footprint), and above 30% (land, material and water footprint), respectively, with maximum CVs up to 394%. We provide a list of the variability of the national and industry environmental footprints in the Additional files so that MRIO scholars can check if an industry/region that is important in their study ranks high, so that either the database can be improved through adding more details on bilateral trade, or the uncertainty can be calculated and reported. Supplementary Information The online version contains supplementary material available at 10.1186/s40008-021-00250-8.

Este artículo estudia el desempeño comercial de los 12 principales países exportadores de bienes industriales en el periodo 2004-2013, analizando tanto la pretendida asociación existente entre la productividad laboral y la competitividad externa, como el rol de las industrias altamente tecnológicas en el éxito exportador. La aplicación de la metodología de Wang, Wei, y Zhu (2018), a partir del uso de matrices insumo-producto globales, para el caso del comercio de E.U y China, muestra el mejor posicionamiento de E.U en CGV y ejemplifica la relevancia de las nuevas dinámicas productiva globales para la evaluación del comercio internacional a nivel sectorial.

Global climate change is an alarming problem nowadays. Weather temperatures have been uncertain because of what many scientists claim is the effect of greenhouse gases, contributed mainly by the energy industry. In Malaysia, the energy industry provides a significant contribution to it economy making up about 20 percent of the GDP. Malaysia is the third largest natural gas exporter in the Asia-Pacific region in 2011 and eleventh in the world (British Petroleum Statistical Review of World Energy, 2014). Malaysia's CO2 emission recorded at 185 million tonnes in 2010 (International Energy Agency, 2012). Mohd Safaai et al. (2011) projected that without any mitigation measures 285.73 million tonnes of CO2 will be released in 2020. In the Copenhagen forum 2009, Malaysia has pledged to reduce 40% of carbon emissions by 2020 compared to the 2005 levels. Motivated by the government efforts, this study will construct environmentally extended input-output framework for Malaysia to obtain the energy-related CO2 emission intensities by sectors. The study is responded to the inadequate of reliable data on Malaysia’s sectoral CO2 emissions and to the growing awareness of the effectiveness of Malaysia climate change policies. This study expanding the current understanding of interactions among economic activities, energy intensities, and CO2 emissions. Results of this study found that Transportation recorded the second highest contributor to CO2 emission, and these findings were different to many other existing studies that found transportation sector as a main contributor to CO2 emission. In addition, results suggest that it is necessary to control environmental problems and encourage the energy use efficiency in the production process, particularly in the Building and construction sector, Transportation, Electricity, gas and water and Agriculture sector in Malaysia The findings will help the policy-makers particularly in Malaysia to develop a strategic plan and tools to manage CO2 emission with respect to climate change in these four sectors.

When economic shocks occur, whether at home or abroad, economic agents are expected to react to reduce the negative impact or amplify the positive effects. The ability of a country to contain econo...

Regional industrialisation and integration form part of the economic policy priorities of a number of countries in Southern Africa and of the Southern African Development Community (SADC). Manufact...

As many other developing countries, the statistical office of Turkey displays an input-output table at the national level only and it is not regularly updated. Yet, the need for regional-level information is growing because numerous publicly-funded development projects and private investments have taken place at the sub-national level over the recent years. In this paper we create an input-output table for one region, TR33, for the year 2014 by regionalizing and updating the national table through a location quotient approach. It allows us to calculate the regional employment and output multipliers across 35 sectors and to verify if their ranking varies across location quotient techniques. We expect our conclusions will help policy-makers and private investors take an informed decision when investing in TR33.

Multiplier effects play a major role in determining importance of a sector of interest to the national economy. In order to determine the significance of Croatian transport sectors, in this paper input-output analysis was applied. A comparative analysis of type I and type II output, gross value added and employment multipliers based on input-output tables for Croatian economy for the year 2010 and 2015 was performed. Type I multipliers were calculated based on the open IO model. Closed IO model was used in type II multipliers determination. Results indicate that sector code H49—Land transport services and transport services via pipelines and sector code H50— water transport services in the year 2015 recorded lower type I and type II output, gross value added and employment multipliers compared to the year 2010. For sector code H51—Air transport services, significant growth in terms of all three economic indicators was detected, especially when interest is focused on type I and type II employment multipliers. Results presented in this paper could be valuable for academia and general public because they reflect multipliers estimation of transport sectors in Republic of Croatia for the first time based on sound macroeconomic analysis tool.

The methodology for calculating the inter-industry map of uncertainty of the Ukrainian economy and the results of the calculations are considered. A historical assessment of a fragment of fiscal risks associated with tax revenue from taxes on products and other production taxes is carried out. The sectors of Ukraine’s economy are classified through the prism of the uncertainty map. It is proposed to use the production portfolio of economic activities as a tool to mitigate fiscal risks.

The relationship between prices and labour values has been the source of fruitful controversy since the earliest Classical Political Economists. The alleged refutation of the labour theory of value was an integral part of the marginalist attack against Classical and Marxist analysis. However, statistical analysis of price-value relationships made possible by the data available since the later 20th century suggest considerable empirical strength of the labour theory of value. We trace the intellectual history of the price-value relationship and its inseparable link to capitalist competition through Smith, Ricardo, Marx and Sraffa. Following Shaikh and Ochoa, we present an empirical model of testing their hypotheses that (1) labour values regulate prices of production and (2) serve as gravitational centres for market prices. The analysis of a large dataset of 42 countries and 15 years reveal only small and stable deviations and thus lend support to the Classical Political Economic analysis. With a sample of over 36,000 price vectors, we provide the most comprehensive empirical application of its class and generalize the results that have been established in the relevant literature.

The construction sector has a special interest in the case of the Spanish economy, given its large economic dimension and environmental impact, particularly during the real estate boom prior to the last economic crisis that started in 2008. We study the CO2 emissions of construction activities in 2007, at the height of the construction boom, in the context of the productive structure of Spain. For this, we use an input–output subsystem method, which allows us to study the productive structure of the subsystem’s activities, taking into account its links with the rest of the sectors. The decomposition of total emissions in four explanatory components allows us to make a classification of the different sectors according to the type of relationships that are established between the subsystem and the rest of the economy. We derive some implications for environmental policy from the analysis of these interrelations.

This study traces the intersectoral linkages or the dependence of industries on one another in Vietnam’s economy within the period of 2000–2012 basing on the input–output analysis. The total linkages—computed using Leontief inverse—are generally employed amongst policymakers as an essential reference in choosing the critical industry. However, for many countries that heavily dependent on imported inputs like Vietnam, total linkages can give an erroneous result. The paper shows how important are the domestic linkages, which is the inverse net of imports, in analyzing the importance of industries in the economy. Constructing the non-competitive input–output tables relying on the assumption that imports are distributed across industries in the same proportion as the gross domestic output of the corresponding industry, the paper finds that there is a considerable divergence between total and domestic linkages. The results imply that import plays a significant role in the intersectoral linkages in the Vietnamese economy. The strength of linkages of some sectors is due to the import utilization effects, but not domestic sectors’ real own ability to create linkages.

In the demand-driven open input–output model, output is determined by final demand, given the production technology in every industry. On the contrary, in the supply-sided version, value added determines the level of output and producers must induce sales in order to achieve a desired level of income. This latter version of the model has been criticised and even rejected on its implausibility, its difficult interpretation and its bizarre implications, among other aspects. This paper argues that the supply-side model is not logically, mathematically or otherwise at odds with Leontief’s arguments. Rejection of the model is a matter of theoretical reading.

Exports matter for domestic employment in both export-producing firms and upstream suppliers. Their total effect can be captured through an input–output-based indicator of export-sustained employme...

The main scope of the paper is to review the construction method of (multi-)regional input–output tables (RIOTs) in the Czech Republic at the NUTS 3 regional level. We compare the estimation of regional IO tables based on a modified cross-hauling adjusted regionalisation method (CHARM) applied by the authors with application of the hybrid approach of (Sixta and Vltavska in Stat Stat Econ J 97:4–14, 2017) from the Department of Statistics at the University of Economics in Prague. The aim of the presented paper is to contribute to the discussion about the suitability of alternative methodological approaches from the perspective of quality and time. We assume that despite the lack of official, published RIOTs by state statistical offices, the existing methodology of the relatively simpler non-survey CHARM method represents an adequate option for the generation of regional input–output tables suitable for further analytical research.

The article describes the uses of multi-input/multi-output systems, with the aim of assessment of structural changes and stability in the Russian transport sector. Empirical input-output data for the period between the years 2000 and 2014 are used. A basic model and overview of the literature are given. The article summarizes the assessment of structural changes and stability. The author gives his own vision of a state of the Russian transport sector. The analysis is carried out for the transport sector as a whole as well as for the various transport modes. Analytical and quantitative results are presented. Assessments of the dynamics of several key economic indicators of the Russian transport sector based on the model calculations are discussed. The indicators were compared based on World Input-Output Database (WIOD) version 2016. It is shown that the share of intermediate goods and services in the transport sector’s gross output fell, while the share of final goods increased from 2000 to 2014. But the share of air transport in the transport sector’s gross output as a whole was stable in 2000-2014.

In the last few decades, the relationship between economy and environment has become the concern of many scholars, there have been many studies linking economic development and environmental pollution. Even the United Nations has introduced an economic-environmental linkage framework such as System of Environmental-Economics Accounts (SEEA) that is compatible with the System of National Accounts (SNA). This study attempts to provide a theoretical framework based on Miyazawa’s ideas on interregional model and demographic-economic model in order to improve the integration between economy and waste.

This paper discusses a new approach to quantify trade creation and trade diversion that relies on the structural decomposition analysis in an inter‐country input–output framework. The proposed measure captures the contribution of trade creation (diversion) between two countries to the GDP growth of the home country, partner country and third countries. For a trial calculation, the author uses the 2016 release of the OECD inter‐country input–output tables and focuses on the period 2000–11. Creation, diversion, but also contraction of trade flows are shown to be intrinsic to any pair of countries that may or may not be linked by a trade agreement. There is no evidence that the rise of free trade agreements in 2000s is associated with higher magnitude of these trade effects for an average country pair. The proposed approach is thought to be a useful alternative to econometric estimates of trade creation and trade diversion available to date.

Input-output (Leontief) production function is widely used in economic analysis. And diminishing marginal rate of return is a very well accepted economic fact. Leontief production function normally results in a linear production possibility frontier (PPF) due to its linear feature, whereas diminishing marginal rate of return implies a non-linear PPF. In this paper, the authors aim to fix this problem by considering multiple primary inputs in a simplified two-sector economy. The authors find that it is possible to curve a non-linear PPF by using Leontief production function when the authors add heterogeneous primary inputs. The authors also discuss the PPF using non-linear production function. Furthermore, the authors propose that three commonly used economic presumptions cannot hold in the same framework. These presumptions are “single primary input”, “fixed-proportion inputs” and “law of diminishing marginal returns”.

We study whether and how the technological importance of an input – measured by its cost share – is related to the decision of whether to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach based on self-constructed input-output tables, we show that French multi- nationals vertically integrate those inputs that have high cost shares. A stylized incomplete contracting model with both ex ante and ex post inefficiencies explains why: technologically more important inputs are “made” when transaction cost eco- nomics type forces (TCE; favoring integration) overpower property rights type forces (PRT; favoring outsourcing). Additional results related to the contracting environ- ment and headquarters intensity consistent with our theoretical framework show that both TCE and PRT type forces are needed to fully explain the empirical patterns in the data.

The construction industry is responsible for large quantities of construction and demolition waste and almost 50% of the worldwide annual resource consumption, putting the environment, its natural resources, and ecosystems under high pressure. Therefore, governments are implementing regional policies that support a circular economy (CE). But how do we know whether these developments will lead to a shift toward a CE on a regional scale? How can we identify hotspots in a value chain and regional economy to support decision-makers and to develop regional policies? We propose an integrated assessment method that considers indicators for environmental impacts and economic benefits by combining Material Flow Analysis (MFA) and Life Cycle Assessment (LCA) with Input-Output Analysis (IOA) as the connecting element. It provides the necessary data and indicators for a holistic and comprehensive evaluation of a region or industry. We demonstrate its benefits and limitations taking the Swiss canton of Aargovia as an example. We analyze which processes in the material flow system of construction minerals are decisive for formulating mass-related or financial policies encouraging a CE. We show that a shift toward a CE can only be captured by combining material and money flows in a joined model, because a significant increase of services—mainly waste management—is a core element in this development. It can only be covered sufficiently by combining environmental and economic assessment. Our model captures the degree to which a regional economy is advanced in the transition toward a CE to compare different regions or analyze scenarios of future developments., Journal of Industrial Ecology, 26 (2), ISSN:1088-1980, ISSN:1530-9290

PurposeThe authors observed few sectors with many connections and many sectors with few connections, “in the Brazilian input-output network,” which meant that sectoral idiosyncratic shocks may lead to aggregate fluctuations.Design/methodology/approachThe authors considered the Brazilian input–output tables for the years 2010 and 2015 and found a significant asymmetry in the roles that sectors play as input suppliers to others.FindingsGeneralized Pareto exponents decreased from one period to the other, which suggested that the input–output network has become more vulnerable to shocks.Practical implicationsThe authors identified real estate as the most important sector and, given its high connectivity, shocks to it could become a major driver of the Brazilian business cycle.Originality/valueThis is the first paper examining the asymmetric structure of the Brazilian input–output table, and results are compared with those for the US table.

For a long time, the use of intermediate products in production has been growing more rapidly in most countries than domestic production. This is a strong indication of more interdependency in production. The main purpose of input-output analysis is to study the interdependency of industries in an economy. Often the term interindustry analysis is also used. Therefore, the exchange of intermediate products is a key issue of input-output analysis. We will use input–output data for this study that the author prepared for the new ‘Handbook on Supply, Use and Input–Output Tables with Extensions and Applications’ of the United Nations. The supply use and input–output tables contain separate valuation matrices for trade margins, transport margins, value added tax, other taxes on products and subsidies on products. For the study, two input–output models were developed to evaluate the impact of fuel subsidy and taxation reform on output, gross domestic product, inflation and trade. Six scenarios are discussed covering different aspects of the reform.

This paper studies the input-output analysis of the productivity and cost of Ukraine’s industries. A classification in the space “productivity–cost” of the industries is proposed. The paper reflects computation results on real data. Descriptive statistics of productivity and cost indices are presented. Selected cross-countries and intertemporal comparison is discussed.

The objective of this paper is to identify the sectors of the Indian economy that are able to generate different types of skilled employment (both directly and indirectly) through an estimation of their employment linkage effects with respect to varying levels of skills, using the Input–Output technique. The contribution of this paper lies in its redefining ‘skill’ by combining three types of education - general, vocational and technical – for arriving at four types of skilled employment categories—low, low-medium, medium-high and high skilled. The paper incorporates these four types of skilled employment into an Input–Output framework, using the World Input–Output Database for estimating the forward and backward employment linkages with respect to four different skill types for India for 2004–05 and 2011–12. The estimation of these employment linkage effects is critical for identifying the key employment-generating sectors of the Indian economy characterized by varying levels of skill. Moreover, a comparison of these linkage effects for two time-periods at varying levels of skill across sectors helps understand changing nature of employment structure over time, and how it varies across sectors.

Energy saving is essential to sustainable development and has been a major target set by the Chinese government. This study analyzes China’s energy intensity change during 1997–2015. This paper applies non-vertical adjusted structural decomposition analysis method to build comparable input-output tables and decomposes China’s energy use according to technical change, demand structure, import structure, import quantity, and export quantity for five types of energy. The results show that: (1) Both technical changes and demand structure changes are important driving forces for China’s energy intensity decrease; (2) Technical changes have played an increasingly important role in energy intensity decrease over time since 2002; (3) Technical change effect has caused the energy intensity of traditional high energy-consuming industries to decrease; (4) The results are robust under different degrees of non-vertical adjustments. Although technical change has played a critical role in China’s energy saving, the increase in demands will become increasingly important factors in changes to energy intensity and will require continued future research.

This editorial summarizes the papers published in issue 15(2) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper combines a conditionally autoregressive process from the spatial statistics literature with a spatial Durbin error model from the spatial econometrics literature. The second paper feeds a multistage and multilevel data envelopment analysis with a microeconomic foundation. The third paper provides empirical evidence that Flegg's location quotient combined with a gravity model produces the most accurate interregional input-output multipliers. The fourth paper investigates the impact of inventor networks on the number of patents per capita in Brazil.

This study calculates the embodied carbon in imports, exports, net exports, and the processing trade of China's wood product sector between 2001 and 2016 using a non-competitive input–output (I–O) model. The results demonstrate that embodied carbon showed a decreasing trend between 2001 and 2016. Embodied carbon was lowest in wood furniture imports and highest in paper and paperboard imports. The embodied carbon in sawnwood and veneer sheet exports was the lowest and paper and paperboard exports was the highest. The embodied carbon in the processing trade of paper and paperboard was the highest. To reduce the embodied carbon in China's wood products, the government should promote technological transformation and upgrading and encourage the implementation of green technology innovation.

We, the Editors and Publisher of Journal of Sustainable Forestry, have retracted the following article:Kai Su, Yihui Chen. Empirical Analysis of the Input-Output Efficiency of Forestry S&T Innovati...

The imbalances among countries belonging to the European Monetary Union (EMU) have been analysed under several angles in recent years, but often neglecting the evolution of economic and pro...

Due to the growing importance of sustainable socioeconomic development at a national level, this paper makes an attempt to identify and assess the relationships between agriculture and the environment in European Union countries in light of input–output tables. To meet that objective, data was retrieved from input-output tables and European environmental accounts. The analysis covered material input and output to/from agriculture, pollutant emissions and biomass production and consumption. European Union countries are witnessing a growing share of sphere I agribusiness (mainly including services, the fuel and energy sector and the chemical industry) in material input to agriculture. While this reflects production modernization efforts, it involves a greater environmental burden. EU countries are reporting a decline in direct material input and the domestic consumption of agricultural biomass per euro of GDP. These changes are indicative of less intensive use of environmental resources (dematerialization of the economy), which is consistent with the assumptions of sustainable development. To summarize, it may be concluded that countries at higher levels of agricultural development are meeting the environmental objectives of sustainable development to a greater extent than countries at lower levels of socioeconomic development.

The Leontief Input-Output model is a valuable tool for economics. Many economic research works are devoted to analysis of Input-Output table [1]-[5]. In this paper, we consider a separation of Copper production subsector from Mining of metal ores sector which is one of the 55 economic sectors of Input-Output Table of Mongolia. We examine impact of this subsector on other economic sectors using Input-Output table for 2016 and Physical Measurement Method of Cost Accounting [6]. We compute input coefficients of new extended matrix as well as inverse coefficients.

Despite the extended use of the input-output framework, its acceptance among economists is limited due to lack of microfoundations and imposed omission of economic rent. A new input-output table is built from basic neoclassical profit maximization, which explicitly considers economic rent. The new table holds eight differences with conventional open input-output tables which enhances the framework’s theoretical basis, allows for economic rent, and yields new insights into economic structures.JEL Codes: C67, D57

Natural and anthropogenic disasters frequently affect both the supply and demand side of an economy. A striking recent example is the Covid-19 pandemic which has created severe disruptions to economic output in most countries. These direct shocks to supply and demand will propagate downstream and upstream through production networks. Given the exogenous shocks, we derive a lower bound on total shock propagation. We find that even in this best case scenario network effects substantially amplify the initial shocks. To obtain more realistic model predictions, we study the propagation of shocks bottom-up by imposing different rationing rules on industries if they are not able to satisfy incoming demand. Our results show that economic impacts depend strongly on the emergence of input bottlenecks, making the rationing assumption a key variable in predicting adverse economic impacts. We further establish that the magnitude of initial shocks and network density heavily influence model predictions., Comment: 29 pages, 10 figures

This paper constructs and uses the global input-output (GIO) table with 35 industries, 29 endogenous countries and 59 exogenous countries, and develops new indices to measure the degree of shock transmission in terms of intermediate goods and value-added embodied in production induced by negative global demand shock to finished goods. After the Global Financial Crisis (GFC) in 2008, China did not experience a large decline in economic growth, even though China’s gross exports fell most severely among Asian countries. In contrast, a sharp decrease in Japanese GDP in 2009 is a consequence of a substantial decline in finished goods exports, especially in the transport equipment industry. In Japan, the shock effect tends to be absorbed in its domestic sector and is not transmitted to other foreign countries. An asymmetric pattern of shock transmission between Japan and other Asian countries can explain why Japan was more affected by GFC than other Asian countries.

The presented considerations are an attempt to verify the possibility of using input-output tables for modeling and, as a consequence, to forecast inflation. The study is a continuation of previous simulation experiments performed on a limited statistical material. The study uses input-output tables expressed in current and constant prices, describing the economy of Denmark. This is the richest available set of tables of this type. Thanks to these tables it was possible to trace long-term changes in the structure of production costs and their impact on the deflator of household consumption.

Migrant remittances are important to some countries. According to the World Bank, they comprise more than 30% of the GDP of Kyrgyzstan, Tonga, Tajikistan, Haiti and Nepal. Compared to official deve...

There exists little evidence in the literature of the extent to which static environmentally extended multiregion input–output (EE-MRIO) studies actually contribute to political decision-making and...

The reduction of CO2 emissions embodied in export will have an important role for China to achieve its CO2 emissions peaking target. In this study, we use input–output analysis to examine t...

Modern macroeconomic theories were unable to foresee the last Great Recession and could neither predict its prolonged duration nor the recovery rate. They are based on supply−demand equilibria that do not exist during recessionary shocks. Here we focus on resilience as a nonequilibrium property of networked production systems and develop a linear response theory for input−output economics. By calibrating the framework to data from 56 industrial sectors in 43 countries between 2000 and 2014, we find that the susceptibility of individual industrial sectors to economic shocks varies greatly across countries, sectors, and time. We show that susceptibility-based growth predictions that take sector- and country-specific recovery into account, outperform—by far—standard econometric models. Our results are analytically rigorous, empirically testable, and flexible enough to address policy-relevant scenarios. We illustrate the latter by estimating the impact of recently imposed tariffs on US imports (steel and aluminum) on specific sectors across European countries., Supply demand equilibria in modern macroeconomic theories do not hold during recessionary shocks. Here the authors developed a non-equilibrium theory for the susceptibility of industrial sectors to shocks and showed these susceptibilities vary across countries, sectors and time and full economic recovery may take six to ten years.