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on Network Economics |
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Issue of 2017‒07‒16
four papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro |
| By: | Heipertz, Jonas; Ouazad, Amine; Rancière, Romain; Valla, Natacha |
| Abstract: | The paper uses disaggregated data on asset holdings and liabilities to estimate a general equilibrium model where each institution determines the diversification and size of the asset and liability sides of its balance-sheet. The model endogenously generates two types of financial networks: (i) a network of institutions when two institutions share common asset or liability holdings or when an institution holds an asset that is the liability of another. In both cases demand/supply decisions by one institution affect the value of other institutions' holdings/liabilities, (ii) a network of financial instruments implied by the distribution of assets and liabilities within and across institutions. A change in the price of one asset induces change in demand/supply for all other assets, thus generating price comovement. The general equilibrium analysis predicts the propagation of real, financial and regulatory shocks as well as the change in the network caused by the shock. |
| Keywords: | Asset Pricing; Dynamic Factors.; Financial Networks; General Equilibrium Model of Asset Trade; heterogenous beliefs |
| JEL: | G01 G11 G12 G15 L14 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12134&r=net |
| By: | Jingong Huang (University of Melbourne) |
| Abstract: | Motivated by empirical evidence from the U.S. patent citation data on the dynamics of firms' patent portfolio development, I build a model of innovation incorporating a technology network structure. The model features firms operating in multiple technology sectors and internalising the spillovers of their own knowledge accumulation to produce patents. Two new insights emerge: The technology network is an important determinant of the patent distribution in different sectors. The growth of patents in each sector is proportional to the Eigenvector Centrality of the technology network. The model is estimated using Simulated Method of Moments and it is capable of reproducing the patent distribution observed in the data. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:24&r=net |
| By: | Fabio Vanni; Paolo Barucca |
| Abstract: | We present a new approach to the study of networks where the formation of links is driven by unilateral initiative of nodes. First, we propose a mathematical description of the extreme introvert and extrovert model (XIE), a dynamic network model in which the number of links fluctuates over time according to the degree-preferences of nodes. Second, we introduce a generalization of the model in which intermittent states can make the evolution of connectivity slower. In this class of networks, system evolution has nodes which can either create or destroy links according to their target attitudes. This model belongs to a class of networks not based on the rationale of linking probability between pair of nodes, but it is based on the initiative of the single units when they act. We select the minimal case of a bipartite network where we have two groups of nodes, each group has nodes with a given capability to bear links. One group (high-target) is composed by nodes that create as many links as possible, the extroverts. The other group (low-target) is composed by nodes that delete as many links as possible, i.e. the introverts. We here provide a novel analytical formulation of the system evolution through coupled Master Equations for the two interacting populations, recovering the steady state degree distributions and a new analytical description of the transient dynamics to the equilibrium. Moreover, we provide numerical evidence supporting the existence of an extreme Thouless effect in this model, i.e. a mixed-phase transition at which the order parameter, here given by the network connectivity, displays a discontinuous jump and large dynamic fluctuations. Fluctuations are also shown to be connected to a peak in degree correlation at the transition, corresponding to same size populations of extroverts and introverts. |
| Keywords: | Network formation,temporal evolution, stochastic process, financial networks, critical transitions |
| Date: | 2017–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2017/16&r=net |
| By: | Lionel Richefort (Université de Nantes, LEMNA) |
| Abstract: | This paper explores a voluntary contribution game in the presence of warm-glow effects. There are many public goods and each public good benefits a different group of players. The structure of the game induces a bipartite network structure, where players are listed on one side and the public good groups they form are listed on the other side. The main result of the paper shows the existence and uniqueness of a Nash equilibrium. The unique Nash equilibrium is also shown to be locally asymptotically stable. Then the paper provides some comparative statics analysis regarding pure redistribution, taxation and subsidies. It appears that small redistributions of wealth may sometimes be neutral, but generally, the effects of redistributive policies depend on how public good groups are related in the contribution network structure. |
| Keywords: | Multiple Public Goods, Warm-glow Effects, Bipartite Contribution Structure, Nash Equilibrium, Comparative Statics |
| JEL: | C72 D64 H40 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.32&r=net |