Transmission of shocks in the integrated accounting framework

Olli Castrén and Ilja Kristian Kavonius

Abstract

ABSTRACT

We extend the integrated national accounts for individual euro area countries by calculating the transaction links between sectors.We perform this for the nonfinancial and financial parts of the accounts and create a generic system that integrates this information. The resulting framework provides a useful platform for static policy simulations and shock transmission analysis.We apply the model for simulations of the EU excessive deficit procedure and find that the impact of fiscal consolidation measures on the other sectors of the economy depends on both the structure of the economy and the specific measures chosen by the government.