Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279209 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10460
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies structural change in production networks for intermediate inputs (input-output network) and new capital (investment network). For each network, we document a declining fraction of production by goods sectors and a rising fraction of production by services sectors. We develop a multisector growth model that admits structural change in production networks along the balanced growth path to study these trends. Disaggregated final expenditure data reveal that inputs to investment production are substitutes, rather than strong complements as suggested by existing work. Hence, resources endogenously reallocate toward the fastest growing producers of investment. Growth accounting exercises demonstrate that investment-specific technical change has risen in importance for aggregate U.S. growth over time, with 20-25% of aggregate growth after 2000 stemming from reallocation induced by structural change. At the same time, productivity growth within the input-output network has stagnated, contributing to the recent slowdown in aggregate growth.
Subjects: 
structural change
input-output network
investment network
economic growth
technical change
balanced growth
JEL: 
E23
O14
O40
O41
Document Type: 
Working Paper
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