A Theory of Input-Output Architecture

Oberfield, Ezra

doi:10.3982/ecta10731

Cited by 151 publications

(88 citation statements)

References 34 publications

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“…Third, it is not a consequence of proportionately more products or innovations arriving over time (as is the case in Romer (1990), Jones (1995), Eaton and Kortum (2001), or Klette and Kortum (2004)). More closely related to our paper are the important prior work by Oberfield (2017), independent contemporaneous work by Taschereau-Dumouchel (2017), and more recent work by Boehm and Oberfield (2018). Finally, it is also not due to thick-tailed productivity draws that continuously improve technology and spreading in the economy via a diffusion process (as in Akcigit, Celik, and Greenwood (2016), Lucas (2009), Lucas and Moll (2014), or Perla and Tonetti (2014)).…”

Section: Introductionmentioning

confidence: 52%

“…33 Both I(n) and O(n) are random variables over R n , where randomness comes from the fact that {a i (S i )} i S i is a sequence of random variables. Let {E(n)} ∞ n=1 be a sequence of economies where E(n) has n industries, and let S(n) be the equilibrium network in economy E(n).…”

Section: The Distribution Of Indegrees and Outdegrees In Large Networkmentioning

confidence: 99%

“…Analogously, let O j (n) = 1 n n i=1 α ij (S(n)) be the (normalized) outdegree of industry j and let O(n) = {O j (n)} n j=1 be the sequence of (normalized) outdegrees. 33 Both I(n) and O(n) are random variables over R n , where randomness comes from the fact that {a i (S i )} i S i is a sequence of random variables. Furthermore, for every i = 1 2 n, we have I i (n) O(n) ≤ 1, so I(n) and O(n) can be interpreted as elements of ∞ (with I i (n) = O i (n) = 0 for all i > n).…”

Section: The Distribution Of Indegrees and Outdegrees In Large Networkmentioning

confidence: 99%

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Endogenous Production Networks

Acemoğlu¹,

Azar²

2020

ECTA

144

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We develop a tractable model of endogenous production networks. Each one of a number of products can be produced by combining labor and an endogenous subset of the other products as inputs. Different combinations of inputs generate (prespecified) levels of productivity and various distortions may affect costs and prices. We establish the existence and uniqueness of an equilibrium and provide comparative static results on how prices and endogenous technology/input choices (and thus the production network) respond to changes in parameters. These results show that improvements in technology (or reductions in distortions) spread throughout the economy via inputoutput linkages and reduce all prices, and under reasonable restrictions on the menu of production technologies, also lead to a denser production network. Using a dynamic version of the model, we establish that the endogenous evolution of the production network could be a powerful force towards sustained economic growth. At the root of this result is the fact that the arrival of a few new products expands the set of technological possibilities of all existing industries by a large amount-that is, if there are n products, the arrival of one more new product increases the combinations of inputs that each existing product can use from 2 n−1 to 2 n , thus enabling significantly more pronounced cost reductions from choice of input combinations. These cost reductions then spread to other industries via lower input prices and incentivize them to also adopt additional inputs.

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Section: Introductionmentioning

confidence: 52%

Section: The Distribution Of Indegrees and Outdegrees In Large Networkmentioning

confidence: 99%

Section: The Distribution Of Indegrees and Outdegrees In Large Networkmentioning

confidence: 99%

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Endogenous Production Networks

Acemoğlu¹,

Azar²

2020

ECTA

144

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“…The model shares some features with Oberfield (), which models the formation of supply chains and the economy's input‐output architecture. In that model, entrepreneurs discover methods of producing their goods using other entrepreneurs' goods as inputs…”

Section: Literature Reviewmentioning

confidence: 99%

The Global Diffusion of Ideas

Buera

Oberfield

2020

ECTA

Self Cite

116

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We provide a tractable, quantitatively-oriented theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Fréchet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, that is, countries' stocks of knowledge. The model remains tractable with many asymmetric countries and generates a rich set of predictions about how the level and composition of trade affect countries' frontiers of knowledge. We use the framework to quantify the contribution of bilateral trade costs to long-run changes in TFP and individual post-war growth miracles. For our preferred calibration, we find that both gains from trade and the fraction of variation of TFP growth accounted for by changes in trade more than double relative to a model without diffusion. ECONOMIC MIRACLES are characterized by protracted growth of per-capita income and productivity as well as increases in trade flows. The experiences of South Korea in the postwar period and the recent performance of China are prominent examples. These experiences suggest an important role played by openness in the process of development. 1Yet quantitative trade models relying on standard static mechanisms imply relatively small gains from openness and, therefore, cannot account for growth miracles. 2 These findings call for alternative channels through which openness can affect development. In this paper, we present and analyze a tractable, quantitatively-oriented model of an alternative suggested a strong relationship between openness and growth, although Rodriguez and Rodrik (2001) subsequently argued that many estimates in the literature suffered from econometric issues including omitted variables, endogeneity, and lack of robustness. More recent contributions to the literature have developed strategies to overcome some of these issues. To estimate the impact of trade on growth, Feyrer (2009a,b) studied the natural experiments of the decade-long closing of the Suez Canal in the 1970s and the long run decline in the cost of shipping goods by air, each of which had larger impacts on some pairs of countries than others, and Pascali (2017) studied the introduction of the steamship which affected some trade routes more than others. See also Lucas (2009b) and Wacziarg and Welch (2008), and Donaldson (2015) for reviews of the literature.2 See Connolly and Yi (2015) for a quantification of the role of trade on Korean's growth miracle. Atkeson and Burstein (2010) also found relatively small effects in a model with innovation.

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“…for efficient outcomes. The literature on the network formation in production and trade, such as Oberfield (2018) and Liu (2018), is perhaps the closest to the current paper and provides complementary results. It studies network formation, where entrepreneurs choose which inputs to use in their (typically Cobb-Douglas) production technology.…”

Section: Related Literaturementioning

confidence: 79%

Price Setting on a Network

Hinnosaar

2018

SSRN Journal

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A Theory of Input-Output Architecture

Cited by 151 publications

References 34 publications

Endogenous Production Networks

Endogenous Production Networks

The Global Diffusion of Ideas

Price Setting on a Network

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