DP13953 Production Networks and Economic Policy

Author(s): Basile Grassi, Julien Sauvagnat
Publication Date: August 2019
Date Revised: September 2019
Keyword(s): Finance, Fiscal policy, Industrial Organisation, industrial policy, inefficiencies, Input-Output, policy, Production Network
JEL(s): E23, L13, L14
Programme Areas: Industrial Organization, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13953

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.