CFCM Seminar: Nico Trachter (Federal Reserve Bank of Richmond)

Title: Sectoral development multipliers (with Francisco Buera)

Abstract:   We study how technology adoption complementarities propagate through an input-output network of sector production. We devise a procedure to estimate both non-parametrically and structurally the incidence of distortions and the relevance of technology adoption across and within sectors. We then compute the response of aggregate output to sector revenue and adoption subsidies aimed to spur development through sector reallocation of production and technology adoption. Large multipliers occur for sectors that are central in both the production and adoption networks. Accounting for adoption greatly magnifies the relative importance of central sectors.