Major crises hit certain economic sectors and regions particularly hard, causing extreme immediate damage to affected companies, which spreads to other companies along corporate supply chains. This is accompanied by negative effects on financial market stability. In order to better estimate the economic damage from future crises, we are developing a new stress test method that takes into account the spread of immediate real economic damage along supply chains at the company level. To this end, we are developing algorithms to be able to simulate the joint spread of real and financial shocks on a newly developed multi-layer network.

The project is funded by the Anniversary Fund of the OeNB (grant no. 18696).