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Fiscal Shocks and International Production Networks: An Empirical Investigation

Isai Quispe ()
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Isai Quispe: Central Reserve Bank of Peru

No 20-2017, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: Recently, a large literature has been developed from the production network models, to be applied in a diversity of fields as financial contagion, trade comovements or the aggregation of micro shocks. Thus, one theoretical implication introduced by Acemoglu et al. (2015), argue that demand-side shocks (i.e. government spending) spread through the production networks following upstream propagation with greater intensity downstream. This paper empirically evaluates the international transmission of government purchase shocks through a production network. Using industry-level data about international input-output linkages, I extend the empirical approach in Acemoglu et al. (2015) to examine employment responses to government purchases. I find that fiscal shocks have a significant and positive impact on the employment, through the international production network.

Keywords: network; upstream; input-output; global; fiscal spillovers (search for similar items in EconPapers)
Pages: 34 pages
Date: 2017-09-08
New Economics Papers: this item is included in nep-mac
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