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on Network Economics |
| By: | Michael B. Devereux (Vancouver school of economics, University of British Columbia, NBER and CEPR); Karine Gente (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE, Marseille, France); Changhua Yu (China Center for Economic Research, National School of Development, Peking University, Beijing, China,) |
| Abstract: | This paper analyzes the impact of fiscal spending shocks in a multi-country model with international production networks. In contrast to standard results suggesting that production network linkages are unimportant for the aggregate response to macro shocks in a closed economy, we show that network structures may place a central role in the international propagation of fiscal shocks, particularly when wages are slow to adjust. The paper first develops a simple general equilibrium multi-country model and derives some analytical results on the response to fiscal spending shocks. We then apply the model to an analysis of fiscal spillovers in the Eurozone, using the calibrated sectoral network structure from the World Input Output Database (WIOD). In a version of the model with sticky wages, we find that fiscal spillovers from Germany and other some other large Eurozone countries may be large, and within the range of empirical estimates. More importantly, we find that the Eurozone production network very important for the international spillovers. In the absence of international production network linkages, spillovers would be only a third as large as predicted by the baseline model. Finally, we explore the diffusion of identified German government spending at the sectoral level, both within and across countries. We find that government expenditures have both significant upstream and downstream effects when these links are measured by the direction of sectoral production linkages. |
| Keywords: | production network, fiscal policy, spillovers, Eurozone, terms of trade, nominal rigidities |
| JEL: | E23 E62 F20 F42 H50 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1919&r=all |
| By: | Dueñas, Marco; Mastrandrea, Rossana; Barigozzi, Matteo; Fagiolo, Giorgio |
| Abstract: | This paper analyses the world web of mergers and acquisitions (M&As) using a complex network approach. We use data of M&As to build a temporal sequence of binary and weighted-directed networks for the period 1995-2010 and 224 countries (nodes) connected according to their M&As flows (links). We study different geographical and temporal aspects of the international M&A network (IMAN), building sequences of filtered sub-networks whose links belong to specific intervals of distance or time. Given that M&As and trade are complementary ways of reaching foreign markets, we perform our analysis using statistics employed for the study of the international trade network (ITN), highlighting the similarities and differences between the ITN and the IMAN. In contrast to the ITN, the IMAN is a low density network characterized by a persistent giant component with many external nodes and low reciprocity. Clustering patterns are very heterogeneous and dynamic. High-income economies are the main acquirers and are characterized by high connectivity, implying that most countries are targets of a few acquirers. Like in the ITN, geographical distance strongly impacts the structure of the IMAN: link-weights and node degrees have a non-linear relation with distance, and an assortative pattern is present at short distances |
| JEL: | C1 N0 |
| Date: | 2017–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:84092&r=all |
| By: | Algan, Yann (Sciences Po and CEPR); Dalvit, Nicolò (Sciences Po); Do, Quoc-Anh (Sciences Po and CEPR); Le Chapelain, Alexis (Department of Economics); Zenou, Yves (Monach University) |
| Abstract: | We study how friendship shapes students' political opinions in a natural experiment. We use the indicator whether two students were exogenously assigned to a short-term \integration group", unrelated to scholar activities and dissolved before the school year, as instrumental variable for their friendship, to estimate the effect of friendship on pairwise political opinion outcomes in dyadic regressions. After six months, friendship causes a reduction of differences in opinions by one quarter of the mean difference. It likely works through a homophily-enforced mechanism, by which friendship causes politically-similar students to join political associations together, which reinforces their political similarity. The effect is strong among initially similar pairs, but absent in dissimilar pairs. Friendship affects opinion gaps by reducing divergence, therefore polarization and extremism, without forcing individuals' views to converge. Network characteristics also matter to the friendship effect. |
| Keywords: | Political opinion; Polarization; Friendship effect; Social networks; Homophily; Extremism; Learning; Natural experiment |
| JEL: | C93 D72 Z13 |
| Date: | 2019–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1294&r=all |
| By: | Barigozzi, Matteo; Brownlees, Christian T. |
| Abstract: | We model a large panel of time series as a var where the autoregressive matrices and the inverse covariance matrix of the system innovations are assumed to be sparse. The system has a network representation in terms of a directed graph representing predictive Granger relations and an undirected graph representing contemporaneous partial correlations. A lasso algorithm called nets is introduced to estimate the model. We apply the methodology to analyse a panel of volatility measures of ninety bluechips. The model captures an important fraction of total variability, on top of what is explained by volatility factors, and improves out-of-sample forecasting. |
| Keywords: | networks; multivariate time series; var; lasso; forecasting |
| JEL: | C1 |
| Date: | 2018–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90493&r=all |
| By: | Algan, Yann; Dalvit, Nicolo; Do, Quoc-Anh; Le Chapelain, Alexis; Zenou, Yves |
| Abstract: | We study how friendship shapes students' political opinions in a natural experiment. We use the indicator whether two students were exogenously assigned to a short-term "integration group", unrelated to scholar activities and dissolved before the school year, as instrumental variable for their friendship, to estimate the effect of friendship on pairwise political opinion outcomes in dyadic regressions. After six months, friendship causes a reduction of differences in opinions by one quarter of the mean difference. It likely works through a homophily-enforced mechanism, by which friendship causes politically-similar students to join political associations together, which reinforces their political similarity. The effect is strong among initially similar pairs, but absent in dissimilar pairs. Friendship affects opinion gaps by reducing divergence, therefore polarization and extremism, without forcing individuals' views to converge. Network characteristics also matter to the friendship effect. |
| Keywords: | extremism; friendship effect; homophily; learning; Natural Experiment; Polarization; Political opinion; Social Networks |
| JEL: | C93 D72 Z13 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13771&r=all |
| By: | Konstantin Büchel, Maximilian v. Ehrlich, Diego Puga, Elisabet Viladecans-Marsal |
| Abstract: | Using anonymised cellphone data, we study the role of social networks in residential mobility decisions. Individuals with few local contacts are more likely to change residence. Movers strongly prefer places with more of their contacts close-by. Contacts matter because proximity to them is itself valuable and increases the enjoyment of attractive locations. They also provide hard-to-find local information and reduce frictions, especially in home-search. Local contacts who left recently or are more central are particularly influential. As people age, proximity to family gains importance relative to friends. |
| Keywords: | social networks, residential mobility |
| JEL: | R23 L14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:rdv:wpaper:credresearchpaper23&r=all |
| By: | Jochmans, K. |
| Abstract: | We consider point estimation and inference based on modifications of the profile likelihood in models for dyadic interactions between n agents featuring agent-specific parameters. This setup covers the ß-model of network formation and generalizations thereof. The maximum-likelihood estimator of such models has bias and standard deviation of O(n-1) and so is asymptotically biased. Estimation based on modified likelihoods leads to estimators that are asymptotically unbiased and likelihood-ratio tests that exhibit correct size. We apply the modifications to versions of the ß-model for network formation and of the Bradley-Terry model for paired comparisons. |
| Keywords: | asymptotic bias, ß-model, Bradley-Terry model, dyadic data, fixed effects, modified profile likelihood, paired comparisons, matching, network formation, undirected random graph |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1958&r=all |
| By: | List, John A. (Department of Economics); Momeni, Fatemeh (Department of Economics); Zenou, Yves (Monach University) |
| Abstract: | We estimate the direct and spillover effects of a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States. We show that failing to account for spillover effects results in a severe underestimation of the impact. The intervention induced positive direct effects on test scores of children assigned to the treatment groups. We document large spillover effects on both treatment and control children who live near treated children. On average, spillover effects increase a child's non-cognitive (cognitive) scores by about 1.2 (0.6 to 0.7) standard deviations. The spillover effects are localized, decreasing with the spatial distance to treated neighbors. Our evidence suggests the spillover effect on non-cognitive scores are likely to operate through the child's social network. Alternatively, parental investment is an important channel through which cognitive spillover effects operate. We view our results as speaking to several literatures, perhaps most importantly the role of public programs and neighborhoods on human capital formation at an early age. |
| Keywords: | Early education; Neighborhood; Field experiment; Spillover effects; Non-cognitive skills |
| JEL: | C93 I21 R10 |
| Date: | 2019–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1293&r=all |