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Sectoral slowdowns in the United Kingdom: Evidence from transmission probabilities and economic linkages

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  • Eva F. Janssens
  • Robin L. Lumsdaine

Abstract

This paper studies spillovers across macroeconomic sectors in the United Kingdom, using data from the Bank of England's Flow of Funds statistics. We combine two different approaches to quantify the spread of economic deterioration to assess whether sectors with large bilateral economic linkages as measured through network data have a greater statistical likelihood of spillovers between them. The combination of both approaches reveals the Monetary Financial Institutions sector's role as shock absorber and identifies the most important channels of spillovers. The inferential discrepancies between network data and statistical spillovers highlight the contribution of the proposed methodology.

Suggested Citation

  • Eva F. Janssens & Robin L. Lumsdaine, 2024. "Sectoral slowdowns in the United Kingdom: Evidence from transmission probabilities and economic linkages," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(1), pages 22-40, January.
    • Handle: RePEc:wly:japmet:v:39:y:2024:i:1:p:22-40
    DOI: 10.1002/jae.3004
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