Echoes and delays: Time-to-build in production networks

Edouard Schaal and Mathieu Taschereau-Dumouchel

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We study how time-to-build and delivery lags affect the propagation of sectoral and aggregate shocks in an economy with input-output linkages. Time-to-build significantly contributes to the persistence of shocks, with highly heterogeneous effects across sectors. We analyze delay shocks and demonstrate that bottlenecks can be identified by the product of a sector’s supplier and buyer centralities. Shocks propagate asynchronously through the network, generating endogenous fluctuations via an echo effect. These fluctuations arise due to the presence of loops in the network. We show that the Fourier spectrum of sectoral and aggregate output can be predicted from the durations and weights of the network’s dominant cycles. Sectoral comovements are complex and can be decomposed into the network’s dominant walks.

JEL-codes: C67 D57 D85 E23 E32 (search for similar items in EconPapers)
Date: 2025-02
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