From Dominick Bartelme and Yuriy Gorodnichenko:
Specialization is a powerful source of productivity gains but how production net- works at the industry level are related to aggregate productivity in the data is an open question. We construct a database of input-output tables covering a broad spectrum of countries and times, develop a theoretical framework to derive an econometric specification, and document a strong and robust relationship between the strength of industry linkages and aggregate productivity. The strength of the relationship is in line with the results we obtain in simulations of a calibrated multi-sector model.
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