INTERCONNECTEDNESS AND RESILIENCE OF THE U.S. ECONOMY

Abstract

An economy consists of interconnected sectors which are specialized in producing different products or providing particular services. We study the interconnectedness of the U.S. economy using a network approach, finding that sectors are highly clustered in this "economy network" and play different roles in facilitating the transactions within the economy. When it comes to resilience of the economy as a whole, however, all sectors play different but nontrivial roles by facilitating alternative input–output routes when a crisis occurs in single or multiple sectors. Diversity in sectors' specialties appears to be the truly important characteristic that keeps the economy functional when facing internal and external challenges.