Nonlinear Domar aggregation over transforming production networks

An economy-wide production network, manifested through monetary input-output coefficients, inherently destabilizes during the general equilibrium propagation of sectoral productivity shocks when substitution elasticities are non-neutral. This study explores the global properties of such networks by mapping the non-linear price manifold into a linearized $\mathit{\text{transcendent}}\mathit{\text{space}}$. Within this framework, we identify the emergence of network $\mathit{\text{singularities}}$, identifying the metabolic thresholds where productivity declines lead to supply-chain paralysis or efficiency gains render primary factors redundant. Furthermore, we demonstrate that the interaction between productivity shocks – the sign of $\mathit{\text{synergism}}$ – is uniquely determined by the substitution elasticity $\sigma$. Our findings transform industrial policy into an $\mathit{\text{inverse}}\mathit{\text{problem}}$ of network topology: we provide a rigorous justification for why an inelastic network necessitates selective concentration on bottleneck sectors, whereas an elastic network favors a diversified investment strategy.