Industries on the Edge : The Most Exposed Sectors to Microeconomic Shocks

We propose a measure of industries’ direct and indirect exposure to microeconomic TFP shocks that originate from any sector of the economy. We show that sectors that rely heavily on intermediate inputs from other industries are more vulnerable to such shocks. In a sample of 43 countries, we find that industries with higher shock exposure experienced significantly greater output volatility between 2000 and 2014, highlighting the importance of input-output linkages in driving microeconomic output volatility. During this period, sectors such as refined petroleum product manufacturing, warehousing, and electricity & gas supply were among the most exposed to shocks