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How does foreign demand activate domestic value added? A comparison among the largest euro-area economies

Author

Listed:
  • Rita Cappariello

    (Bank of Italy)

  • Alberto Felettigh

    (Bank of Italy)

Abstract

We propose an analysis for the largest euro-area countries (France, Germany, Italy and Spain), based on the framework developed by Koopman et al. (2014) for tracing value added in a country’s exports by source and use. We integrate their approach by introducing an additional dimension: the domestic-sector origin of value added embodied in exports. While providing an accurate picture of these countries’ participation in global value chains, we estimate the impact on their GDP of a shock to foreign demand and disentangle individual contributions along a geographical dimension in a period running from the introduction of the euro to the beginning of the sovereign debt crisis.

Suggested Citation

  • Rita Cappariello & Alberto Felettigh, 2015. "How does foreign demand activate domestic value added? A comparison among the largest euro-area economies," Temi di discussione (Economic working papers) 1001, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1001_15
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    References listed on IDEAS

    as
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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