Propagation of shocks in an input-output economy: Evidence from disaggregated prices


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Studies indicate that utilizing disaggregated industry-level data has allowed for empirical testing of predictions made by input-output models with inflexible prices.
Furthermore, it has been observed that the price reactions to shocks align with the price sensitivities projected by the input-output model.
Additionally, it has been found that the distribution of moments of sectoral pricing shift has changed over time in response to alterations in network structure.

Image courtesy of interviewee. November 11, 2023

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