Propagation of Sector-Specific Shocks within Spain and Other Countries

40 Pages Posted: 8 Aug 2019

Date Written: August 7, 2019

Abstract

We explore the propagation of sector-specific shocks through the Spanish input-output network. First, we outline a theoretical framework borrowed from the networks literature that allows us to distinguish between downstream (from suppliers to customers) and upstream (from customers to suppliers) propagation depending on the nature of the shocks considered, either supply- or demand-driven. Second, we compute industry-specific domestic multipliers and compare the propagation features of the Spanish production network with those of other countries using the National Input-Output Tables (NIOTs) for the year 2014. According to our findings, the electricity sector in Spain is the most systemic industry in terms of its economy-wide impact, which is significantly larger than in other European countries. We also find that the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) in the second half of 2018 and its propagation through input-output linkages might have a larger aggregate impact in Germany than in Spain.

Keywords: input-output tables, networks, shock propagation

JEL Classification: F14, F15

Suggested Citation

Izquierdo, Mario and Moral-Benito, Enrique and Prades Illanes, Elvira, Propagation of Sector-Specific Shocks within Spain and Other Countries (August 7, 2019). Banco de Espana Working Paper No. 1928, 2019. Available at SSRN: https://ssrn.com/abstract=3433691 or http://dx.doi.org/10.2139/ssrn.3433691

Mario Izquierdo (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Enrique Moral-Benito

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Elvira Prades Illanes

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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