This paper studies the effects of domestic and foreign demand impulses in euro area economies following the Great Recession of 2008-09 and the Eurozone crisis of 2011-12. Using a global input-output framework we apply a set of metrics to assess spillover and feedback effects triggered by the dynamics of final demand. Our findings suggest that cross-country trade spillovers have had a moderate impact as compared to the role of domestic sources of final demand in explaining the contraction in income and employment. Hence, a strategy of coordinated fiscal austerity cannot be sustained by empirical evidence
The present paper is a methodological contribution introducing a disaggregated physical productivity accounting framework in vertically (hyper-)integrated terms, establishing a direct correspondence between Supply- Use Tables and Pasinetti' s (1973, 1988) theoretical magnitudes. As an empirical application, we computed productivity indicators and indexes of direction of technical change at the subsystem level for the case of Italy during 1999-2007. Our findings suggest that: (a) only 60 per cent of productivity growth accrued to real wages, (b) the degree of mechanization increased, (c) the most dynamic subsystems correspond to consolidated sectors, and (d) technical change has almost always been capital intensity increasing.
* The present paper has been written within the framework of the Research Group PRIN 2009Structural Change and Growth, of the Italian Ministry of Instruction, University and Research (MIUR). We thank all the group participants for discussions. A previous version of this paper was the output of participating to the International School of Input-Output Analysis, 2012 Edition: we thank our supervisors for their advice. We wish to thank two anonymous referees for their helpful and valuable comments and suggestions. The usual disclaimers apply. Special acknowledgement goes to Prof. Luigi Pasinetti, for his continuous encouragement and support. We would finally like to spare a thought in memory of our dear late friend Angelo Reati.
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