|Author (Person)||Boranova, Vizhdan, Huidrom, Raju, Ozturk, Ezgi O., Stepanyan, Ara, Topalova, Petia, Zhang, Shihangyin (Frank)|
|Publisher||International Monetary Fund|
|Series Title||IMF Working Papers|
|Series Details||WP/22/6, Number 6|
|Publication Date||January 2022|
|Content Type||Research Paper|
The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe.
Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.
|Subject Categories||Business and Industry|
|Subject Tags||Automotive Industry|