  This paper investigates how economic shocks propagate and amplify through the
input-output network connecting industrial sectors in developed economies. We
study alternative models of diffusion on networks and we calibrate them using
input-output data on real-world inter-sectoral dependencies for several
European countries before the Great Depression. We show that the impact of
economic shocks strongly depends on the nature of the shock and country size.
Shocks that impact on final demand without changing production and the
technological relationships between sectors have on average a large but very
homogeneous impact on the economy. Conversely, when shocks change also the
magnitudes of input-output across-sector interdependencies (and possibly sector
production), the economy is subject to predominantly large but more
heterogeneous avalanche sizes. In this case, we also find that: (i) the more a
sector is globally central in the country network, the largest its impact; (ii)
the largest European countries, such as those constituting the core of the
European Union's economy, typically experience the largest avalanches,
signaling their intrinsic higher vulnerability to economic shocks.
