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

_IMF Working Papers, May 24, 2019_

## Source details

**Canonical URL:** [Transmission of Domestic and External Shocks through Input-Output Network: Evidence from Korean Industries](https://www.imf.org/en/publications/wp/issues/2019/05/24/transmission-of-domestic-and-external-shocks-through-input-output-network-evidence-from-46914)

## Other formats

- [Markdown version](/en/publications/wp/issues/2019/05/24/transmission-of-domestic-and-external-shocks-through-input-output-network-evidence-from-46914/index.md)
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## Bibliographic details
- Authors: Dongyeol Lee
- Published: May 24, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498315821.001

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### 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 paper contributes to the understanding of the potential interactions between the industrial structure and economic growth and stability.

### Key findings
- The role of vertical and trade linkages in propagating growth shocks from both domestic sources and external sources is important.
- The growth impact of a few key sources of economic shocks is relatively large.
- 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.

### Policy implications and considerations
- Monitor concentration and interconnectedness in manufacturing sectors to assess vulnerability to propagated shocks via vertical and trade linkages.
- Identify and track "few key" industries and major trading partners as potential sources of large aggregate fluctuations due to their outsized impact through input-output networks.
- Consider resilience policies that mitigate propagation channels across industries and international trade links to limit large swings in overall economic activity.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/05/24/transmission-of-domestic-and-external-shocks-through-input-output-network-evidence-from-46914_