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The Dynamic Impact of Real Distortions in Production Networks

2022
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Release : 2022
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Book Synopsis The Dynamic Impact of Real Distortions in Production Networks by : Chunyang Fu

Download or read book The Dynamic Impact of Real Distortions in Production Networks written by Chunyang Fu. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt: We analytically characterize the comparative statics and transitory dynamics of the macroeconomy after a one-time real distortion changes by assuming supply chain adjustment costs. We analytically decompose the comparative static effects into economic structure channel and technology channel. And supply chain adjustment costs act as buffer effects that reduce the magnitudes of aforementioned two channels in the transitory dynamics. We find that distortion changes in sectors that generate significant sales through distant linkages to consumers are disproportionately damaging to the economy. Our results are robust in more general setups such as general constant return to scale production functions and heterogeneous supply chain adjustment costs across sectors.

Distortions in Production Networks

2016
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Release : 2016
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Book Synopsis Distortions in Production Networks by : Saki Bigio

Download or read book Distortions in Production Networks written by Saki Bigio. This book was released on 2016. Available in PDF, EPUB and Kindle. Book excerpt: How does an economy's production structure determine its macroeconomic response to sectoral distortions? We study a static framework in which production is organized in an input-output network and firms' production decisions are distorted. We show how sectoral distortions manifest at the aggregate level via two channels: total factor productivity and the labor wedge. The strength of each channel depends jointly on the input-output structure and the distribution of shocks. Near efficiency, distortions generate zero first-order effects on TFP but non-zero first-order effects on the labor wedge; the latter we show to be determined by the sector's network "centrality." We apply the model to the 2008-09 Financial Crisis and find that the U.S. input-ouput network may have amplified financial distortions by roughly a factor of two relative to a counterfactual economy devoid of intermediate good trade.

Dynamic Production Networks

1981 Network analysis (Planning)
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Release : 1981
Genre : Network analysis (Planning)
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Book Synopsis Dynamic Production Networks by : Ronald William Shephard

Download or read book Dynamic Production Networks written by Ronald William Shephard. This book was released on 1981. Available in PDF, EPUB and Kindle. Book excerpt: A dynamic theory of production networks is outlined with discussion of computational dynamics for such systems. (Author).

Dynamic Production Networks with Cascading Failures

2022
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Release : 2022
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Book Synopsis Dynamic Production Networks with Cascading Failures by : Chunyang Fu

Download or read book Dynamic Production Networks with Cascading Failures written by Chunyang Fu. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes a dynamic general equilibrium model featuring input-output linkages, imperfect competition, and external economies of scale with firm entry and exit. We analytically show the interaction between input-output linkages and firm entry and exit augments the amplification of productivity shocks through the elastic labor supply channel additionally. A basic calibration of the dynamic model with cap- ital accumulation shows that output is 30% more volatile in the dynamic production network with cascading failures than without cascading failures.

Endogenous Growth in Production Networks

2018
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Release : 2018
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Book Synopsis Endogenous Growth in Production Networks by : Stanislao Gualdi

Download or read book Endogenous Growth in Production Networks written by Stanislao Gualdi. This book was released on 2018. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the interplay between technological change and macro-economic dynamics in an agent-based model of the formation of production networks. On the one hand, production networks form the structure that determines economic dynamics in the short run. On the other hand, their evolution reflects the long-term impacts of competition and innovation on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the network. In turn, product innovation induces a direct growth of the firm's productivity and the potential destruction of links. The interplay between both processes generates complex technological dynamics in which phases of process and product innovation successively dominate. The model reproduces a wealth of stylized facts about industrial dynamics and technological progress, in particular the persistence of heterogeneity among firms and Wright's law for the growth of productivity within a technological paradigm. We illustrate the potential of the model for the analysis of industrial policy via a preliminary set of policy experiments in which we investigate the impact on innovators' success of feed-in tariffs and of priority market access.

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