A quantitative approach for analysis of macroeconomic resilience due to socio-economic shocks

Abstract

Macroeconomics has constantly been exposed to socio-economic shocks. The concept of resilience in the economy has been developed to predict these shocks, reduce damages, and recover quickly. This paper proposes a quantitative approach for analyzing macroeconomic resilience due to socio-economic shocks and suggests appropriate actions to improve resilience. In this way, the variables affecting macroeconomic resilience have been identified through the literature review. Next, an integrated indicator of macroeconomic performance based on Data Envelopment Analysis (DEA) has been developed. Finally, the periods of shocks are identified by determining the turning points of that indicator, and an appropriate approach for defining macroeconomic resilience is developed. The proposed approach is applied to three countries of the USA, China, and Iran in different shocks, including global crisis, COVID-19 pandemic, and oil price shock. Eventually, by analyzing the relationships between effective variables on the macroeconomic resilience, using the DEMATEL method, we determine the most important variables to improve macroeconomic resilience, which can be useful for socio-economic planning at a macro level.