Speaker: Shaowen Luo（Virginia Tech）

Time: 9:00-10:30 am, April 4, 2023, GMT+8

Venue: Zoom Meeting ID: 926 3889 7210 Passcode: 908060

Abstract:

This paper empirically evaluates the predictions for the cross-sectional price change distribution made by input-output models with sticky prices. Using disaggregated industry-level data, we find that the response of price to shocks is consistent with the price sensitivities predicted by the input-output model. Moreover, moments of sectoral price change distribution vary over time in response to the evolution of the network structure. Finally, through a quantitative analysis, we disentangle sectoral demand and supply shocks during the pandemic period. Running counterfactual analyses, we find that sectoral supply shocks, aggregate demand shock and the propagation of shocks through the production network contributed significantly to the inflation surge in 2021-2022.

Biography:

This paper empirically evaluates the predictions for the cross-sectional price change distribution made by input-output models with sticky prices. Using disaggregated industry-level data, we find that the response of price to shocks is consistent with the price sensitivities predicted by the input-output model. Moreover, moments of sectoral price change distribution vary over time in response to the evolution of the network structure. Finally, through a quantitative analysis, we disentangle sectoral demand and supply shocks during the pandemic period. Running counterfactual analyses, we find that sectoral supply shocks, aggregate demand shock and the propagation of shocks through the production network contributed significantly to the inflation surge in 2021-2022.

Source: National School of Development