The Impact of Monetary Policy Through Production Networks—Empirical Evidence from Sectoral Electricity Consumption in China

This paper utilizes unique high-frequency, daily electricity consumption data across economic sectors to examine the impact of monetary policy shocks on economic output, with a particular focus on the network spillover effects and sectoral heterogeneity introduced by inter-sector linkages. The study finds that quantity-based monetary policy (e.g., M2) generates significant positive and cascading spillover effects within the production network. However, the total effects of monetary policy shocks are broadly similar across upstream, midstream, and downstream sectors, exhibiting only minor differences. Notably, the proportion of network (indirect) effects increases systematically from upstream to downstream sectors and displays marked sectoral heterogeneity. In contrast, interest-rate-based monetary policy displays insufficient spatial spillover through production networks. These findings offer important insights for policymakers to optimize structural policy design and promote coordinated sectoral chain development, which can guide the pursuit of sustainable economic strategies that balance growth, resource utilization and sectoral interdependencies.