Discussion Paper Details

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Title: Production Networks and Economic Policy

Author(s): Basile Grassi and Julien Sauvagnat

Publication Date: August 2019

Keyword(s): Finance, Fiscal policy, Industrial Organisation, industrial policy, inefficiencies, Input-Output, policy and Production Network

Programme Area(s): Industrial Organization and Macroeconomics and Growth

Abstract: In this paper, we show how to combine data on input-output tables and recent insights from the theory of production networks in order to inform policy. We first describe the information contained in input-output tables compiled by statistical agencies, and show how to derive relevant statistics of production networks. We then discuss the implications of production networks for policy intervention in a series of domains, such as fiscal policy, industrial policy, or, finance. Finally, we present a quantitative exercise applied to French data in order to illustrate that production networks shape the overall impact of competition policy on the economy.

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Bibliographic Reference

Grassi, B and Sauvagnat, J. 2019. 'Production Networks and Economic Policy'. London, Centre for Economic Policy Research.