The paper
This article develops a simple network model of how shocks spread through international input-output links. It then examines whether network centrality helps explain country-sector output changes during the global financial crisis.
Research findings
- In the model, a node’s eigenvector centrality summarizes its exposure to a shock transmitted through the input-output network.
- More central country-sector nodes experienced larger output declines in 2007–2009, including in tests that exclude the United States and the finance and real-estate sectors.
Policy takeaways
- Include production links across the wider economy when assessing international shock exposure, rather than examining the financial sector alone.
- Use input-output network measures to complement country and sector indicators in economic risk analysis.