Distortions and the Structure of the World Economy

We model the world economy as one system of endogenous input-output relationships subject to frictions and study how world’s structure GDP change due changes in frictions. derive a sufficient statistic identify from observed matrix, which we fully match for year 2011. show internal impact whole that they have much larger effect on than external also use our approach role during Great Recession 2007–2009. (JEL D57, E16, E23, E32, F41, G01)