Production Network Structure, Service Share, and Aggregate Volatility

Jorge Miranda-Pinto

Review of Economic Dynamics, 2021, vol. 39, 146-173

Abstract: This paper shows that GDP growth volatility declines with production network diversification. To account for this evidence, I build a multisector model with CES technologies and a cost of complexity in the bundle of intermediates. Production network diversification decreases volatility when intermediate inputs and labor are substitute inputs. U.S. sectoral data suggest that labor and intermediates are substitutes in service sectors. Therefore, a calibrated model that then also matches each country's production network can quantitatively generate the empirical patterns. The model also explains why service-oriented countries are less volatile: service sectors have a more diversified set of suppliers. (Copyright: Elsevier)

Keywords: Input-output structure; Volatility; Service share; Elasticity of substitution (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://dx.doi.org/10.1016/j.red.2020.07.001
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See https://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "Production Network Structure, Service Share, and Aggregate Volatility" (2020)
Working Paper: Production Network Structure, Service Share, and Aggregate Volatility (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:19-157

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2020.07.001

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().