Exogenous Shocks on the Dual-country Industrial Network: A Simulation Based on the Policies during the COVID-19 Pandemic

ABSTRACT

This article investigates the performance of the industrial structure in different emerging markets under exogenous shocks during the COVID-19. Based on the ICIO database, we use System Dynamics to simulate the evaluation of the economic system under different types of exogenous shocks (instantaneous shocks like entertainment restrictions, and continuous shocks like trade controls). We find that there are significant differences in the shock absorption capability of a country, that capability is not related to the magnitude of the shock, but related to the type of shock and the industrial structure.