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Industries on the edge: The most exposed sectors to microeconomic shocks

Author

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  • Bahal, Girish
  • Lenzo, Damian

Abstract

We propose a measure of industries’ direct and indirect exposure to microeconomic TFP shocks that originate from any sector of the economy. We show that sectors that rely heavily on intermediate inputs from other industries are more vulnerable to such shocks. In a sample of 43 countries, we find that industries with higher shock exposure experienced significantly greater output volatility between 2000 and 2014, highlighting the importance of input–output linkages in driving microeconomic output volatility. During this period, sectors such as refined petroleum product manufacturing, warehousing, and electricity & gas supply were among the most exposed to shocks.

Suggested Citation

  • Bahal, Girish & Lenzo, Damian, 2023. "Industries on the edge: The most exposed sectors to microeconomic shocks," Economics Letters, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:ecolet:v:232:y:2023:i:c:s0165176523003725
    DOI: 10.1016/j.econlet.2023.111347
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    More about this item

    Keywords

    Production networks; Propagation of sector-level shocks; Microeconomic volatility;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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