Income Differences, Productivity, and Input-Output Networks
American Economic Journal: Macroeconomics
vol. 14,
no. 2, April 2022
(pp. 367-415)
Abstract
We study the importance of input-output (IO) linkages and sectoral productivity (TFP) in determining cross-country income differences. We find that while highly connected sectors are more productive than the typical sector in poor countries, the opposite is true in rich ones. To assess the quantitative role of linkages and sectoral TFP differences in cross-country income differences, we decompose cross-country income variation using a multisector general equilibrium model. We find that IO linkages substantially amplify fundamental sectoral TFP variation, but this amplification is significantly weaker than the one suggested by a simple IO model with an aggregate intermediate good.Citation
Fadinger, Harald, Christian Ghiglino, and Mariya Teteryatnikova. 2022. "Income Differences, Productivity, and Input-Output Networks." American Economic Journal: Macroeconomics, 14 (2): 367-415. DOI: 10.1257/mac.20180342Additional Materials
JEL Classification
- D57 General Equilibrium and Disequilibrium: Input-Output Tables and Analysis
- E16 General Aggregative Models: Social Accounting Matrix
- E23 Macroeconomics: Production
- O11 Macroeconomic Analyses of Economic Development
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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