The impact of oil supply news shocks on corporate investments and the structure of production network

A recent strand of work builds on the intuition and evidence regarding the importance of the structure of production network for the transmission of macroeconomic and financial shocks. In this paper, I use a high-frequency identified series of oil supply news shocks and look at how the production networks affect the transmission of this shock to corporate investments. I combine a macroeconomic dataset regarding oil news supply with an extensive dataset of US firms. I focus on the case of the response of firms' corporate investments. I use a spatial analysis to quantify the impact of the structure of the production network. I found that indirect or network effects amplify the negative impact of oil supply news shock in the United States, and they also dominate the direct effects. The results are robust to sample change or alternative oil supply news measures. The financial characteristics of firms amplify the negative impact of positive oil news shocks.