Productivity, Networks and Input-Output Structure
Christian Ghiglino and
No 624, 2015 Meeting Papers from Society for Economic Dynamics
We consider a multi-sector general equilibrium model with IO linkages, sector-specifc productivities and tax rates. Using tools from network theory, we investigate how the IO structure interacts with productivities and taxes in the determination of aggregate income. Employing a statistical approach, we show that aggregate income is a simple function of the first and second moments of the distribution of the IO multipliers, sectoral productivities and sectoral tax rates. We then estimate the parameters of the model to fit their joint empirical distribution, allowing these to vary with income per capita. We find an important difference between rich and medium-low income countries. Poor countries have more extreme distributions of IO multipliers than rich economies: there are a few high-multiplier sectors, while most sectors have very low multipliers; in contrast, rich countries have more sectors with intermediate multipliers. Moreover, the correlations of these with productivities and tax rates are positive in poor countries, while being negative in rich ones. The estimated model predicts cross-country income differences extremely well, also out-of-sample (up to 97% of the variation in relative income per capita). Finally, we perform a number of counterfactuals. First, we "impose" the dense IO structure of the U.S. on low- and middle-income countries and find a large damaging effect, up to 80% of per capita income. Second, we assume that sectoral IO multipliers and productivities are uncorrelated and find that low-income countries would lose up to 50% of their per capita income while high-income countries ould gain.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:624
Access Statistics for this paper
More papers in 2015 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().