Abstract

In the wake of the COVID-19 pandemic, the Government of India imposed production restrictions on various sectors of the economy. Prima facie there is reason to believe that the cost of the quantity constraints may be greater than their simple sum. This is because quantity constraints percolate through the production network forcing some sectors to reduce output because of the non-availability of inputs. This paper uses an input–output network model (IO-NET model) to study the impact of the lockdown on the Indian economy. We calibrate our IO-NET model to the Indian economy using data on sectoral linkages. We then examine the impact of the lockdown using sector-based computational experiments. Such experiments allow us to examine the out-of-equilibrium time dynamics that emerge in response to the lockdown. The transient dynamics reveal certain counterintuitive phenomena. The first of which is that the supply of output of some sectors increases during and immediately after the lockdown. Second, recovery after the relaxation of the lockdown entails the overshooting of GDP above its normal levels. And the size of the overshooting depends on the stickiness of prices. These counterintuitive phenomena are intimately related to the network interaction between firms as buyers and sellers of intermediate inputs. The paper also measures the network effect of the lockdown across different sectors. There is sizeable heterogeneity among sectors in how their network position amplifies the quantity constraints imposed on sectors distantly related to them as buyers–sellers of intermediate inputs. Ultimately, models like our own can serve as testbeds for policy experiments, especially when the model is calibrated to granular data on buyer–seller linkages in the economy.

中文翻译：

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印度生产网络因新冠疫情封锁而发生的短暂动态

摘要

COVID-19 大流行后，印度政府对各个经济部门实施了生产限制。表面上有理由相信数量限制的成本可能大于它们的简单总和。这是因为生产网络中渗透着数量限制，迫使某些部门因无法获得投入而减少产出。本文使用输入输出网络模型（IO-NET模型）来研究封锁对印度经济的影响。我们使用部门联系数据根据印度经济校准我们的 IO-NET 模型。然后，我们使用基于部门的计算实验来检查锁定的影响。这些实验使我们能够检查因封锁而出现的不平衡时间动态。瞬态动力学揭示了某些违反直觉的现象。首先是一些部门的产出供应在封锁期间和封锁后立即增加。其次，放松封锁后的复苏必然导致GDP超出正常水平。而超调的大小取决于价格的粘性。这些违反直觉的现象与作为中间投入的买家和卖家的企业之间的网络互动密切相关。该论文还衡量了不同部门封锁的网络效应。各部门之间存在相当大的异质性，因为它们的网络地位如何放大对作为中间投入的买卖双方关系较远的部门施加的数量限制。最终，像我们这样的模型可以作为政策实验的测试平台，特别是当模型根据经济中买卖双方联系的详细数据进行校准时。