On the linkage between Gross Value Added by Economic Activities and the Overall Gross Value Added in EU-27

Abstract The financial and economic crisis led to a significant recession in the EU-27 in 2009, followed by a rebound in 2010. The existing economic situation requires a rethinking of the economic development policies, focused on analyzing the indicator of gross value added, created in production. This may lead to a new growth model, based on economic activities with higher value added. This paper investigates the linkage between overall gross value added in EU-27 and gross value added by economic activities, as described by NACE Rev. 2, from first quarter 2010 to second quarter 2020. The article attempts to include a wide range of statistical analysis and models for a complete assessment of the subject. Therefore, in order to achieve the objective, we choose to investigate the presence of causality relationships using VAR/SVAR models and Granger causality test, which reflect the presence of long and short-term relationships between certain selected variables. Through the assessment, we discovered a strong bi-directional causality between overall gross value added and the gross value added by industry and by distributive trades, transport, accommodation and food services, based on which we estimated a linear regression. The findings should present interest for policymakers, in order to assess perspectives to economic growth.