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Cited by 2,198

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

The Network Origins of Aggregate Fluctuations

·2012·Econometrica
DOI 10.3982/ecta9623
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Abstract

This paper argues that in the presence of intersectoral input-output linkages, microeconomic idiosyncratic shocks may lead to aggregate fluctuations.We show, as the economy becomes more disaggregated, the rate at which aggregate volatility decays is determined by the structure of the network capturing such linkages.Our main results provide a characterization of this relationship in terms of the importance of different sectors as suppliers to their immediate customers as well as their role as indirect suppliers to chains of downstream sectors.Such higher-order interconnections capture the possibility of "cascade effects" whereby productivity shocks to a sector propagate not only to its immediate downstream customers, but also to the rest of the economy.Our results highlight that sizable aggregate volatility is obtained from sectoral idiosyncratic shocks only if there exists significant asymmetry in the roles that sectors play as suppliers to others, and that the "sparseness" of the input-output matrix is unrelated to the nature of aggregate fluctuations.

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Metadata

Venue
Econometrica
Publisher
The Econometric Society
Published
2012
Volume
80
Issue
5
Pages
1977-2016
ISSN
0012-9682 (ISSN-L)
DOI
10.3982/ecta9623
OpenAlex
W3124656445
Cited by
2,198
References
1
FWCI
108.90
Type
journal article
Language
en
Open access
closed

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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

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