Analyzing the transmission effects of monetary policy in production networks under economic policy uncertainty

Pin Peng, Yuanzhi Kang and Wanli Huang

Finance Research Letters, 2025, vol. 74, issue C

Abstract: This study leverages the “National Economic Industry Classification (2017)” input–output table to construct a spatial weight matrix. It employs a fixed-effects spatial panel Durbin model to analyze the transmission effects of monetary policy through production networks to the real economy. The analysis reveals that production networks serve as a significant channel for monetary policy transmission. However, economic policy uncertainty index (EPU) weakens the transmission effects of production networks and dampens real economic growth. Nonetheless, it remains uncertain whether production networks amplify the suppressive effects of economic policy uncertainty (EPU) on economic growth.

Keywords: Production network; Dupin model; Economic uncertainty; Spatial weight matrix (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:74:y:2025:i:c:s1544612325000273

DOI: 10.1016/j.frl.2025.106762

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