Storyboard

The productive sectors are the nodes of the inter-sectoral production network: each sector i produces a good or service using inputs from other sectors j (Leontief technical relations) and primary factors (labor and capital). The structure of these inter-sectoral relationships encoded in the matrix of technical coefficients A, where a_{ij} is the quantity of good i necessary to produce a unit of good j determines the interdependence architecture of the economy: which sectors are "upstream" (provide inputs to many), which sectors are "downstream" (depend on many suppliers), and which are the central nodes whose disturbance propagates shocks throughout the entire network.

The Leontief analysis of the input-output table (Input-Output analysis, Leontief 1941) allows calculating the total production multiplier: the inverse Leontief matrix (I-A)^{-1} gives the total (direct and indirect) production requirements of sector j necessary to satisfy a unit of final demand of sector i. The columns of (I-A)^{-1} are the employment and income multipliers of each sector, and allow calculating the aggregate impact of a final demand shock on total production.

From the perspective of econophysics, the inter-sectoral production network is a weighted directed graph whose topological properties have economic implications: sectors with high betweenness centrality are critical nodes whose disturbance generates cascades of shortages in multiple value chains simultaneously. The distribution of edge weights (inter-sector intensities aj) typically follows an exponential shear power law, indicating that the production network has scale-free network properties with saturation. The expected behavior is that final demand shocks are amplified across the inter-sector network by a factor (I-A)^{-1} > I, and that shocks on highly central sectors (energy, transportation, manufacturing) have significantly larger systemic multipliers than shocks on peripheral sectors.

>Model

ID:('ky', 986)

Description

ID:(0, 986)