The Aggregate Importance of Intermediate Input Substitutability

Alessandra Peter declares that she has no relevant or material financial interests that relate to the research described in this paper. Cian Ruane gratefully acknowledges financial support from the Stanford Institute for Innovation in Developing Economies (SEED) and from the Stanford Institute for Economic Policy Research (SIEPR), received while he was affiliated with Stanford University. We would like to thank Pete Klenow for his continued support and invaluable guidance on this project, as well as Nick Bloom, Chad Jones and Monika Piazzesi for many helpful conversations and Ezra Oberfield for an insightful discussion at the NBER SI. We are also very grateful to Petia Topalova and Amit Khandelwal for sharing their data with us. Thanks also for the thoughtful comments provided by the participants of seminars at the Atlanta Federal Reserve Bank, the Dallas Federal Reserve Bank, INSEAD, HEC Montreal, the NBER SI, the Stanford Macroeconomics Workshops, the SED St Louis, ThReD, UC Santa Barbara, the University of Montreal, the University of Toronto Rotman School of Management, the EEA meetings, and EAGLS. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, its management, or the National Bureau of Economic Research.