Production Networks and the (Asymmetric) Transmission of Monetary Policy

2026

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AI-generated summary

1) Production networks significantly influence how monetary policy affects prices, with upstream industries showing greater price responsiveness due to their more flexible pricing.
2) This paper analyzes the transmission of monetary policy through production networks, examines the role of price rigidity, and investigates the asymmetric effects of expansionary versus contractionary shocks.
3) The study finds that upstream industries, which sell more to other businesses, adjust prices more frequently, leading to a larger cumulative price response to monetary policy shocks compared to downstream industries.
Tags: monetary policy, production networks, price rigidity, upstreamness, asymmetric pricing

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