No. 1020 - Shock propagation and economic policies in the Italian production network

Questioni di Economia e Finanza (Occasional papers)
by Fabio Bertolotti, Andrea Linarello and Patrick Zoi
June 2026
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This paper studies how the effects of economic policies and sector-specific productivity shocks propagate across sectors throughout the Italian production network. The analysis uses a new quantitative macroeconomic model that allows us to assess these propagation mechanisms in the presence of significant interdependencies across sectors.

The aggregate effects of economic policies or sectoral shocks crucially depend on the structure of the production network. Interconnections across sectors can either dampen or amplify the shocks affecting economic activity. When a shock originates upstream in the production chain, its impact is typically magnified. Moreover, propagation is non-linear, implying that the effects may vary significantly depending on the intensity of the initial shock.

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  1. 12 June 2026
    No. 1020 - Shock propagation and economic policies in the Italian production network
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