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Ben Shepherd
''International input-output linkages and exogenous shock transmission: a simple model''
( 2018, Vol. 38 No.4 )
This paper develops a simple model of shock transmission through an input-output network. The impact of a negative shock on distant nodes is related to the eigenvector centrality scores of those nodes. This finding is independent of production technology, and flows only from the structure of the network. Econometric models using data from the 2008-2009 Financial Crisis lend strong support to the model: centrality has a significant, negative impact on output changes following the crisis. Network structure, covering interlinkages among all sectors of the economy, not just the locus of a shock, therefore has a significant impact on propagation.
Keywords: Networks; Centrality; Global Financial Crisis; Input-Output.
JEL: F1 - Trade: General
C6 - Mathematical Methods and Programming: General
Manuscript Received : May 04 2018 Manuscript Accepted : Dec 10 2018

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