Working Papers

The Size-Centrality Relationship in Production Networks
with Nikola Dacic and Marko Melolinna

Abstract

Standard production network models with only technology shocks predict that industry size and centrality move in opposite directions. Yet in UK data, they co-move positively: larger industries are more central as input suppliers, and industries that grow tend to become more central. We trace this tension to the elasticity of substitution across intermediate inputs: when it is below unity, as we estimate, technology shocks generate a negative size-centrality relationship. Demand-side shocks resolve the puzzle. Applying the framework to the UK post-2010 productivity slowdown, we find that manufacturing-specific shocks more than account for the slowdown, while common shocks partially offset it.

Cross-Country Differences in the Impacts of Sectoral Shocks
(draft available upon request)

Abstract

The same sectoral shock can devastate a poor country and leave a rich one largely unaffected. I explain this contrast in a multisector model with input-output linkages and non-homothetic preferences, in which GDP and welfare respond differently to identical shocks. Calibrating the model to 80 economies, I find that a common agricultural shock produces median welfare losses 19.0 times larger in the poorest quartile of countries than in the richest, against a factor of 1.46 for GDP. The vulnerability of poor countries stems mainly from subsistence demand, and the role of production networks itself changes as countries develop.

Work in Progress

Agricultural Productivity Differences and Directed Technical Change

Informality and the Job Ladder in Developing Countries
with Matthias Doepke

Macroprudential Regulation, Financial Stability, and Economic Growth