Transmission of Domestic and External Shocks through Input-Output Network: Evidence from Korean Industries

May 24, 2019

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Format: Chicago

Dongyeol Lee. Transmission of Domestic and External Shocks through Input-Output Network: Evidence from Korean Industries, (USA: International Monetary Fund, 2019) accessed November 12, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In the last two decades, manufacturing industries in Korea have become more concentrated, and interconnectedness across industries and to foreign countries has risen via vertical relationships and trade linkages. This paper investigates the transmission of economic shocks in such a highly concentrated and interconnected structure, focusing on the role of vertical and trade linkages and using the industry-level international input-output data. The results suggest that, first, the role of vertical and trade linkages in propagating growth shocks from both domestic sources and external sources is important. Second, the growth impact of a few key sources of economic shocks is relatively large. These findings highlight that economic shocks in a few key industries and/or major trading partners that are transmitted through vertical and trade linkages can lead to large swings in the overall economy. This paper contributes to the understanding of the potential interactions between the industrial structure and economic growth and stability.

Subject: Economic sectors, Exports, Imports, International trade, Labor productivity, Manufacturing, Production, Productivity

Keywords: Aggregate Fluctuations, Exports, Global, Growth shock, Imports, Industry shock, Input-output data, Labor productivity, Manufacturing, Manufacturing industry, Productivity, Productivity growth, Trade Linkage, Transmission of Shocks, Vertical Linkage, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/117
Stock No:

WPIEA2019117
ISBN:

9781498315821
ISSN:

1018-5941

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