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A dynamic disequilibrium input–output model of the Belgian COVID-19 pandemic

Author

Listed:
  • Alleman, Tijs
  • Schoors, Koen
  • Baetens, Jan

Abstract

We adapt the dynamic disequilibrium input-output model of Pichler et al. (2022). [Journal of Economic Dynamics and Control, 144, 104527.] to the Belgian economy and conduct a cross-context validation of the COVID-19 pandemic. Labor supply and export demand shocks are refined using business surveys and observed trade flows, while household demand shocks are calibrated to 115 time series on GDP, revenue, employment, and interindustry transactions. The refined shocks improve the model’s ability to reproduce the observed evolution of GDP, revenue, and employment. However, the model systematically underestimates the persistence of interindustry trade, suggesting structural limitations in its ability to represent firms’ incentives to sustain trade. Relaxing the Leontief production function based on input criticality improves the model’s accuracy, consistent with the original model, though differentiation across degrees of relaxation proved unidentifiable despite a larger dataset. Overall, our results confirm the original model’s validity for assessing epidemic-driven economic impacts, thereby strengthening its credibility as a policy tool.

Suggested Citation

  • Alleman, Tijs & Schoors, Koen & Baetens, Jan, 2024. "A dynamic disequilibrium input–output model of the Belgian COVID-19 pandemic," MPRA Paper 128828, University Library of Munich, Germany, revised 26 Feb 2026.
    • Handle: RePEc:pra:mprapa:128828
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    References listed on IDEAS

    as
    1. Manuel Reiriz & Macarena Donoso-González & Benjamín Rodríguez-Expósito & Sara Uceda & Ana Isabel Beltrán-Velasco, 2023. "Impact of COVID-19 Confinement on Mental Health in Youth and Vulnerable Populations: An Extensive Narrative Review," Sustainability, MDPI, vol. 15(4), pages 1-21, February.
    2. Anton Pichler & Marco Pangallo & R. Maria del Rio-Chanona & Franc{c}ois Lafond & J. Doyne Farmer, 2020. "Production networks and epidemic spreading: How to restart the UK economy?," Papers 2005.10585, arXiv.org.
    3. Stéphane Hallegatte, 2008. "An Adaptive Regional Input‐Output Model and its Application to the Assessment of the Economic Cost of Katrina," Risk Analysis, John Wiley & Sons, vol. 28(3), pages 779-799, June.
    4. Pichler, Anton & Pangallo, Marco & del Rio-Chanona, R. Maria & Lafond, François & Farmer, J. Doyne, 2022. "Forecasting the propagation of pandemic shocks with a dynamic input-output model," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    5. Ch. Piette & J. Tielens, 2022. "How Belgian firms fared in the COVID-19 pandemic ?," Economic Review, National Bank of Belgium, pages 1-33, June.
    6. Yasuhide Okuyama, 2007. "Economic Modeling for Disaster Impact Analysis: Past, Present, and Future," Economic Systems Research, Taylor & Francis Journals, vol. 19(2), pages 115-124.
    7. Stéphane Hallegatte, 2008. "An adaptive regional input-output model and its application to the assessment of the economic cost of Katrina," Post-Print hal-00716550, HAL.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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