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Echoes and Delays: Time-to-build in Production Networks

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  • Mathieu Taschereau-Dumouchel
  • Edouard Schaal

Abstract

We study how time-to-build and delivery lags affect the propagation of sectoral and aggregate shocks in an economy with input-output linkages. Time-to-build signiï¬ cantly contributes to the persistence of shocks, with highly heterogeneous effects across sectors. We analyze delay shocks and demonstrate that bottlenecks can be identiï¬ ed by the product of a sector's supplier and buyer centralities. Shocks propagate asynchronously through the network, generating endogenous fluctuations via an echo effect. These fluctuations arise due to the presence of loops in the network. We show that the Fourier spectrum of sectoral and aggregate output can be predicted from the durations and weights of the network's dominant cycles. Sectoral comovements are complex and can be decomposed into the network's dominant walks.

Suggested Citation

  • Mathieu Taschereau-Dumouchel & Edouard Schaal, 2025. "Echoes and Delays: Time-to-build in Production Networks," Working Papers 1482, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1482
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    References listed on IDEAS

    as
    1. David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-2959, December.
    2. Daron Acemoglu & Asuman Ozdaglar & Alireza Tahbaz-Salehi, 2017. "Microeconomic Origins of Macroeconomic Tail Risks," American Economic Review, American Economic Association, vol. 107(1), pages 54-108, January.
    3. Jess Benhabib & Kazuo Nishimura, 2012. "The Hopf Bifurcation and Existence and Stability of Closed Orbits in Multisector Models of Optimal Economic Growth," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 51-73, Springer.
    4. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    5. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    6. Alessandria, George & Khan, Shafaat Yar & Khederlarian, Armen & Mix, Carter & Ruhl, Kim J., 2023. "The aggregate effects of global and local supply chain disruptions: 2020–2022," Journal of International Economics, Elsevier, vol. 146(C).
    7. Charles I. Jones, 2011. "Intermediate Goods and Weak Links in the Theory of Economic Development," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 1-28, April.
    8. Ernest Liu & Aleh Tsyvinski, 2024. "A Dynamic Model of Input–Output Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3608-3644.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business cycles; endogenous fluctuations; networks; time-to-build;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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