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From Micro to Macro via Production Networks
Friday 17th October 2014
CINET:
1418
Carvalho, V. M.
A modern economy is an intricately linked web of specialized production units, each relying on the flow
of inputs from their suppliers to produce their own output which, in turn, is routed towards other
downstream units. In this essay, I argue that this network perpective on production linkages can offer
novel insights on the sources of aggregate fluctuations. To do this, I show (i) how production networks
can be mapped to a standard general equilibrium setup; (ii) how to approach input-output from this
networked perspective and (iii) how theory and data on production networks can be usefully combined
to shed light on comovement and aggregate fluctuations.
Keywords
Production Networks; Comovement; Business Cycles; Input-Output Linkages
Themes
transmission