Solow Growth Model with Network Production Functions: Theoretical and Empirical Explorations

LARROSA, JUAN M.C.; TEDESCO, LORENA; BERMÚDEZ, CECILIA

Progress in Economic Research

Nova Publishers

Lugar: New York; Año: 2017; p. 7 - 56

Networks have been a recurrent topic in recent economic literature. From a microeconomic (Bala and Goyal, 2000) to a macroeconomic perspective (Acemoglu et al. (2010, 2012, 2013, 2015)) passing through more technical contributions (Huremovic and Vega-Redondo, 2016) the network approach has been embraced as a new way of understanding economic interdependence. Topics such as trade, intermediation, innovation, technological diffusion, learning, or the transmission of shocks have been a regular framework for network implementations. Relevant precursors in the area are Walras (1876), von Neumann (1937), Leontief (1986) or Hirschman (1970), all of whom have made the point on the importance of interindustry relationships (or linkages) for a wider understanding of some of the key characteristics of an economic system. In this tradition, the present chapter proposes a simple model economic growth that, despite being standard in almost every respect, highlights the network of sectoral relationships on its production side. At a glance, our objective is twofold: first, to obtain a precise understanding of how some relevant aspects of the production network topology (on which different architectures are imposed) shapes the rate of growth and more specifically, how the technological progress is formed by a concatenation of sectoral shocks. Secondly, we want to associate production network structural features with economic growth as a mean of contributing empirically in the field of network of production and growth.