Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279165 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10416
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We derive closed-form solutions and sufficient statistics for inflation and GDP dynamics in multi-sector New Keynesian economies with arbitrary input-output linkages. Analytically, we decompose how production linkages (1) amplify the persistence of inflation and GDP responses to monetary and sectoral shocks and (2) increase the pass-through of sectoral shocks to aggregate inflation. Quantitatively, we confirm the significant role of production networks in shock propagation, emphasizing the disproportionate effects of sectors with large input-output adjusted price stickiness: The three sectors with the highest contribution to the persistence of aggregate inflation have consumption shares of around zero but explain 16% of monetary non-neutrality.
Subjects: 
production networks
multi-sector model
sufficient statistics
inflation dynamics
real effects of monetary policy
sectoral shocks
JEL: 
E32
E52
C67
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.