The Robust Properties of Economies with Endogenous Production Networks

Simone Cerreia-Vioglio, Roberto Corrao, Joel P. Flynn and Giacomo Lanzani

No 35909, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We characterize equilibria in a canonical class of economies with endogenous production networks, showing that log-prices equal a min-max over networks of a primitive affine function of log-productivities. This formula captures how resilience and fragility interact: the "min" reflects resilience from substituting suppliers, while the "max" reflects fragility from complementarity-induced rigidity. Applying these results, we generalize Hulten's theorem, finding that local Domar weights are generally insufficient to describe propagation of even small shocks. Moreover, we characterize how microeconomic volatility affects GDP, finding that smooth changes in Domar weights overstate its adverse effects by omitting option value from switching suppliers.

JEL-codes: C0 E0 (search for similar items in EconPapers)
Date: 2026-10
Note: EFG ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w35909.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
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:nbr:nberwo:35909

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w35909
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().