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

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https://orcid.org/0000-0002-9736-8930
,
Raju Huidromnull

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Ezgi O. Ozturknull

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,
Ara Stepanyan
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Petia Topalovanull

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, and
Shihangyin (Frank) Zhang
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 006
Language:
English
Publication Date:
14 Jan 2022
DOI:
https://doi.org/10.5089/9781616356897.001
ISBN:
9781616356897
ISSN:
1018-5941
Pages:
42
Keywords:
Auto sector; supply chains; spillovers; Europe; auto sector; Labor supply shocks; car sale; vehicle production; Labor supply; Supply shocks; Spillovers; COVID-19; Automobile industry; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 006