Time to Build and Dynamic Diffusion in Production Networks

Matteo Bizzarri

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: I show that in a dynamic economy with a production network, time to build decreases the volatility generated by productivity shocks, while it increases the volatility generated by demand shocks. This is because the propagation of demand shocks is fundamentally different: since quantities are pre-determined, demand shocks directly affect prices, a channel absent without time to build.

Keywords: production networks; time to build; propagation; shocks (search for similar items in EconPapers)
JEL-codes: D57 D85 E32 (search for similar items in EconPapers)
Date: 2024-03-14, Revised 2025-10-16
New Economics Papers: this item is included in nep-net
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Citations: View citations in EconPapers (1)

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