Saved in:
| Main Authors: | , |
|---|---|
| Format: | Preprint |
| Published: |
2024
|
| Subjects: | |
| Online Access: | https://arxiv.org/abs/2404.18137 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866917169060642816 |
|---|---|
| author | Nakano, Satoshi Nishimura, Kazuhiko |
| author_facet | Nakano, Satoshi Nishimura, Kazuhiko |
| contents | An economy-wide production network, manifested through monetary input-output coefficients, inherently destabilizes during the general equilibrium propagation of sectoral productivity shocks when substitution elasticities are non-neutral. This study explores the global properties of such networks by mapping the non-linear price manifold into a linearized \textit{transcendent space}. Within this framework, we identify the emergence of network \textit{singularities}, identifying the metabolic thresholds where productivity declines lead to supply-chain paralysis or efficiency gains render primary factors redundant. Furthermore, we demonstrate that the interaction between productivity shocks -- the sign of \textit{synergism} -- is uniquely determined by the substitution elasticity $σ$. Our findings transform industrial policy into an \textit{inverse problem} of network topology: we provide a rigorous justification for why an inelastic network necessitates selective concentration on bottleneck sectors, whereas an elastic network favors a diversified investment strategy. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2404_18137 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Nonlinear Domar aggregation over transforming production networks Nakano, Satoshi Nishimura, Kazuhiko Theoretical Economics An economy-wide production network, manifested through monetary input-output coefficients, inherently destabilizes during the general equilibrium propagation of sectoral productivity shocks when substitution elasticities are non-neutral. This study explores the global properties of such networks by mapping the non-linear price manifold into a linearized \textit{transcendent space}. Within this framework, we identify the emergence of network \textit{singularities}, identifying the metabolic thresholds where productivity declines lead to supply-chain paralysis or efficiency gains render primary factors redundant. Furthermore, we demonstrate that the interaction between productivity shocks -- the sign of \textit{synergism} -- is uniquely determined by the substitution elasticity $σ$. Our findings transform industrial policy into an \textit{inverse problem} of network topology: we provide a rigorous justification for why an inelastic network necessitates selective concentration on bottleneck sectors, whereas an elastic network favors a diversified investment strategy. |
| title | Nonlinear Domar aggregation over transforming production networks |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2404.18137 |