Networks and the Macroeconomy: An Empirical Exploration

Abstract

A second concern is whether measurement error in the input-output matrix might be significantly amplified when we compute the Leontief inverses. Another Monte Carlo exercise we perform in appendix C verifies that even if the input-output matrix is measured with error, regressions of the sort we have used are capable of recovering the correct parameters. We take these two Monte Carlo exercises as useful confirmation of the robustness and informativeness of our empirical strategy.