Sparse production networks

Bernard, Andrew B. and Zi, Yuan (2022) Sparse production networks. CEP Discussion Papers (CEPDP1879). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Firm-to-firm connections in domestic and international production networks play a fundamental role in economic outcomes. Firm heterogeneity and the sparse nature of firm-to-firm connections implicitly discipline network structure. We find that a large group of well-established statistical relationships are not useful in improving our understanding of production networks. We propose an "elementary" model for production networks based on random matching and firm heterogeneity and characterize the families of statistics and data generating processes that may raise underidentification concerns in more complex models. The elementary model is a useful benchmark in developing "instructive" statistics and informing model construction and selection.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2022 The Authors
Divisions:	LSE
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce
JEL classification:	F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
Date Deposited:	24 Jan 2023 10:42
Last Modified:	21 Feb 2024 00:07
URI:	http://eprints.lse.ac.uk/id/eprint/118004

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