This paper studies the effects of domestic and foreign demand impulses in euro area economies following the Great Recession of 2008–2009 and the Eurozone crisis of 2011-2012. Using a global Input-Output framework we apply a set of metrics to assess spillover effects of international trade in intermediates triggered by the dynamics of final demand. Our findings suggest that while cross-country trade spillovers have played a crucial role during the Great Recession, they have had a moderate impact when compared with the role of domestic sources of final demand during the Eurozone crisis. Hence, a strategy of coordinated fiscal austerity cannot be sustained by empirical evidence.
- global crisis
- international trade
- multi-regional input-output analysis