Research

(Abstract). Modern economies are organized as dense production networks, yet the transmission of shocks is conventionally understood through observed Input-Output linkages and vertical cascade effects. This paper argues that this view is incomplete. Propagation also operates through horizontal complementarities: the extent to which sectors share upstream suppliers or downstream buyers. These interdependencies shape a latent network of connections, linking also otherwise unconnected sectors, and generate simultaneous responses to idiosyncratic shocks through structural demand and supply similarities embedded in the Input-Output system. Aggregate volatility then results from  widespread correlations that prevent shocks from averaging out. This novel diffusion channel acts as a complement to vertical propagation, offering a unified view of comovement rooted in the horizontal geometry of common interactions rather than network trade intensities. Using Input-Output data, I show that sectoral responses vary systematically with horizontal economic distances, with similar sectors exhibiting opposing responses, and distant ones comoving positively.

JEL: C67, D57, E32, J21

KEYWORDS: production networks, Input-Output economy, horizontal transmission, network distance, sectoral comovement, aggregate fluctuations

(Abstract). This paper examines the determinants of U.S. wage inequality between industries. It distinguishes two channels of Skill-Biased Technological Change: a quantity effect, mirroring variations in the distribution of capital and labour inputs, and a structural effect, reflecting differences in substitution elasticities across factors of production. Counterfactual exercises show that evolving technological heterogeneity in substitution patterns dominates wage dispersion. A quantitative decomposition reveals that structural forces, mostly reflecting substitutability of routine with non-routine labour, account for 94% of observed wage variance, exacerbated by stronger sorting and segregation effects. Upon neutralising structural differences, the quantity channel reckons merely 6-15%. Indeed, structural heterogeneity, rather than mere changes in factor quantities, is the dominant force behind U.S. wage inequality.

JEL: E24, J31, J82, L16

KEYWORDS: wage inequality, technological change, labour force composition, elasticity of substitution

(Abstract). This paper studies how production networks shape inflation dynamics. Standard models emphasize cost propagation through input-output linkages. We show that the same linkages also shape demand by determining how sectoral output reaches final consumers. In a multi-sector New Keynesian model, sectors sell both to final demand and to other producers, generating a within-sector strategic complementarity in price setting. Using EMU country-sector data, we show that Phillips curve slopes vary systematically with both network participation and proximity to final demand. Sectors more dependent on previous production stages display flatter Phillips curves, while proximity to final demand has a non-monotonic effect. Inflation is most sensitive to activity when sectors are neither purely final-demand oriented nor purely intermediate-input suppliers. The aggregate Phillips curve therefore depends on the organization of production.

JEL: E31, E32, E52, F41

KEYWORDS: inflation dynamics, production networks, Phillips Curve, Global Value Chains, real rigidities, price stickiness, strategic complementarities