Weekly Economics Seminar by Girish Bahal
February 5 @ 1:30 pm - 2:40 pm
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Title: When firms matter: Propagation of firm-level shocks through production network
Speaker: Girish Bahal, Assistant Professor, University of Western Australia Business School
Abstract: Recent evidence shows how sector level shocks can propagate through the production network into aggregate fluctuations. Propagation of firm-level shocks, however, has been less studied. In this paper, we show how i) intersectoral firm-level network linkages between sectors and ii) switching rigidities between customer-supplier relation can explain how firm-level shocks can propagate into aggregate economy-wide fluctuations. This result holds even when the number of firms in an economy becomes arbitrarily large or when firms within a sector produce perfectly substitutable goods.