
on Network Economics 
Issue of 2017‒10‒01
two papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro 
By:  Koen Jochmans; Martin Weidner 
Abstract:  This paper studies inference on fixed effects in a linear regression model estimated from network data. An important special case of our setup is the twoway regression model, which is a workhorse method in the analysis of matched data sets. Networks are typically quite sparse and it is difficult to see how the data carry information about certain parameters. We derive bounds on the variance of the fixedeffect estimator that uncover the importance of the structure of the network. These bounds depend on the smallest nonzero eigenvalue of the (normalized) Laplacian of the network and on the degree structure of the network. The Laplacian is a matrix that describes the network and its smallest nonzero eigenvalue is a measure of connectivity, with smaller values indicating lessconnected networks. These bounds yield conditions for consistent estimation and convergence rates, and allow to evaluate the accuracy of firstorder approximations to the variance of the fixedeffect estimator. The bounds are also used to assess the bias and variance of estimators of moments of the fixed effects. 
Date:  2016–08 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:1608.01532&r=net 
By:  Lee Branstetter; Neil Gandal; Nadav Kuniesky 
Abstract:  A large and growing literature has used patent and patent citation data to measure knowledge spillovers across inventions and organizations, but relatively few papers in this literature have explicitly considered the collaboration networks formed by inventors as a mechanism for shaping and transmitting these knowledge flows. This paper utilizes an approach developed by Fershtman and Gandal (2011) to examine the incidence and nature of knowledge flows mediated by the collaboration networks of inventors active in the information security industry. This is an industry in which a number of nations outside the United States, including Israel, have emerged as important centers of innovation. Using data from U.S. PTO patent grants in information security, we find that the quality of Israeli information security inventions is systematically linked to the structure of the collaborative network generated by Israeli inventors in this sector. Using the Fershtman and Gandal (2011) model, this suggests that there are knowledge spillovers from the network. In some other nations, invention quality is less closely linked to the collaboration networks of inventors. This research highlights the importance of direct interaction among inventors as a conduit for flows of frontier scientific knowledge. 
JEL:  O31 O33 O57 
Date:  2017–09 
URL:  http://d.repec.org/n?u=RePEc:nbr:nberwo:23808&r=net 