Cars in Europe: Supply Chains and Spillovers during COVID-19 Times

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Series Details WP/22/6, Number 6
Publication Date January 2022
ISBN 9781616356897
ISSN 1018-5941
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Summary:

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.

Source Link https://www.imf.org/en/Publications/WP/Issues/2022/01/14/Cars-in-Europe-Supply-Chains-and-Spillovers-during-COVID-19-Times-511743
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  • https://www.imf.org/-/media/Files/Publications/WP/2022/English/wpiea2022006-print-pdf.ashx
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Record URL https://www.europeansources.info/record/?p=526089