Department of Economics and Business - Universitat Pompeu Fabra

Title:: From micro to macro via production networks
Author:: Vasco Carvalho
Date:: October 2014
Abstract:: 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 usefuly combined to shed light on comovement and aggregate fluctuations.
Keywords:: Production Networks; Comovement; Business Cycles; Input-Output Linkages.
Area of Research:: Macroeconomics and International Economics
Published in:: Journal of Economic Perspectives, 28 (4), 23-48, 2014

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