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on Network Economics |
| By: | Bomin Jiang; Roberto Rigobon; Munther A. Dahleh |
| Abstract: | In this paper, we develop a methodology to estimate hidden linear networks when only an aggregate outcome is observed. The aggregate observable variable is a linear combination of the different networks and it is assumed that each network corresponds to the transmission mechanism of different shocks. We implement the methodology to estimate financial networks among US financial institutions. Credit Default Swap rates are the observable variable and we show that more than one network is needed to understand the dynamic behavior exhibited in the data. |
| JEL: | E0 E44 G1 G21 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26814&r=all |
| By: | Faia, Ester; Mayer, Maximilian; Pezone, Vincenzo |
| Abstract: | This paper presents causal evidence of the effects of boardroom networks on firm value. We exploit exogenous variation in network centrality arising from a ban on interlocking directorates of Italian financial and insurance companies. We leverage this shock to show that firms that become more central in the network as a result of the shock experience positive abnormal returns around the announcement date. We find that information dissemination plays a central role: results are driven by firms that have higher idiosyncratic volatility, low analyst coverage, and more uncertainty surrounding their earnings forecasts. We also find that firms benefit more from boardroom centrality when they are more central in the input-output network, as this reinforces information complementarities, or when they are less central in the cross-ownership network, as well as when they suffer from low profitability and low growth opportunities. Network centrality also results in higher compensation for board directors. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:269&r=all |
| By: | Levati, Lorenzo Maria; Lalanne, Marie |
| Abstract: | Using an original dataset on professional networks of directors sitting on the boards of large US corporations, we examine how personal relationships are used by firms to improve job match quality in the high-skill segment of the labor market. Analyzing explicit social connection data between new hires and recruiters, we are able to test predictions of well established job referral models. We find that referred executive directors have a fifteen percent longer tenure than their non-referred counterparts. Referred executive directors also tend to be similar to their referrers on multiple dimensions, giving support to network homophily hypotheses. |
| Keywords: | Referrals,Job Match Quality,Social Networks,Board of Directors |
| JEL: | L14 J63 M51 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:268&r=all |
| By: | Yannis Bakos; Hanna Halaburda |
| Abstract: | A major result in the study of two-sided platforms is the strategic interdependence between the two sides of the same platform, leading to the implication that a platform can maximize its total profits by subsidizing one of its sides. We show that this result largely depends on assuming that at least one side of the market single-homes. As technology makes joining multiple platforms easier, we increasingly observe that participants on both sides of two-sided platforms multi-home. The case of multi-homing on both sides is mostly ignored in the literature on competition between two-sided platforms. We help fill this gap by developing a model for platform competition in a differentiated setting (a Hoteling line), which is similar to other models in the literature but focuses on the case where at least some agents on each side multi-home. We show that when both sides in a platform market multi-home, the strategic interdependence between the two sides of the same platform will diminish or even disappear. Our analysis suggests that the common strategic advice to subsidize one side in order to maximize total profits may be limited or even incorrect when both sides multi-home, which is an important caveat given the increasing prevalence of multi-homing in platform markets. |
| Keywords: | multi-homing, platforms, two-sided platforms, network effects, platform subsidies |
| JEL: | O33 L11 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8126&r=all |
| By: | James Gaboardi |
| Abstract: | This paper furthers a research agenda for modeling populations along spatial networks and expands upon an empirical analysis to a full U.S. county (Gaboardi, 2019, Ch. 1,2). Specific foci are the necessity of, and methods for, validating and benchmarking spatial data when conducting social science research with aggregated and ambiguous population representations. In order to promote the validation of publicly-available data, access to highly-restricted census microdata was requested, and granted, in order to determine the levels of accuracy and error associated with a network-based population modeling framework. Primary findings reinforce the utility of a novel network allocation method—populated polygons to networks (pp2n) in terms of accuracy, computational complexity, and real runtime (Gaboardi, 2019, Ch. 2). Also, a pseudo-benchmark dataset’s performance against the true census microdata shows promise in modeling populations along networks. |
| Keywords: | network allocation, Master Address File, population representation |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-05&r=all |
| By: | Xingxing Ye; Raphaël Douady (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The global financial market has become extremely interconnected as it demonstrates strong nonlinear contagion in times of crisis. As a result, it is necessary to measure financial systemic risk in a comprehensive and nonlinear approach. By establishing a large set of risk factors as the main bones of the financial market network and applying nonlinear factor analysis in the form of so-called PolyModel, this paper proposes two systemic risk indicators that can prognosticate the advent and trace the development of financial crises. Through financial network analysis, theoretical simulation, empirical data analysis and final validation, we argue that the indicators suggested in this paper are proved to be very effective in forecasting and tracing the financial crises from 1998 to 2017. The economic benefit of the indicator is evidenced by the enhancement of a protective put/covered call strategy on major stock markets. |
| Keywords: | validation,PolyModel,nonlinear regression,network,financial indicator,systemic risk crisis,Indicators,Poly-Model,Systemic Risk,Nonlinear |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-02488592&r=all |
| By: | Luca Riccetti (Department of Economics and Law, Università degli Studi di Macerata, Italy); Alberto Russo (Department of Management, Università Politecnica delle Marche, Ancona, Italy and Department of Economics, Universitat Jaume I, Castellón, Spain); Mauro Gallegati (Department of Management, Università Politecnica delle Marche, Acona, Italy) |
| Abstract: | We present an agent-based model to study firm-bank credit market interactions in different phases of the business cycle. The business cycle is exogenously set and it can give rise to various scenarios. Compared to other models in this literature strand, we improve the mechanism according to which the dividends are distributed, including the possibility of stock repurchase by firms. In addition, we locate firms and banks over a space and firms may ask credit to many banks, resulting in a complex spatial network. The model reproduces a long list of stylized facts and their dynamic evolution as described by the cross-correlations among model variables. The model allows us to test the effectiveness of rules designed by the current financial regulation, such as the Basel 3 countercyclical capital buffer. We find that its effectiveness of this rule changes in different business cycle environments and this should be considered by policy makers. |
| Keywords: | Agent-based modeling, credit network, business cycle, financial regulation, macroprudential policy |
| JEL: | C63 E32 E52 G01 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/16&r=all |
| By: | Martin Fischer (na); Ulf-Göram Gerdtham, (Lund University, Sweden); Gawain Heckley (Lund University, Sweden); Martin Karlsson (University Duisburg-Essen, Germany); Gustav Kjellsson (University of Gothenburg, Sweden); Therese Nilsson (Lund University, Sweden) |
| Abstract: | We investigate two parallel school reforms in Sweden to assess the long-run health effects of education. One reform only increased years of schooling, while the other increased years of schooling but also removed tracking leading to a more mixed socioeconomic peer group. By differencing the effects of the parallel reforms, we can separate the effect of de-tracking and peers from that of more schooling. We find that the pure years of schooling reform reduced mortality and improved current health. Differencing the effects of the reforms shows significant differences in the estimated impacts, suggesting that de-tracking and subsequent peer effects resulted in worse health. |
| Keywords: | Health returns to education, school tracking, peer effects |
| JEL: | I12 I18 I26 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:duh:wpaper:1906&r=all |
| By: | Dinarte Diaz,Lelys Ileana |
| Abstract: | This paper provides experimental evidence of the effect of having peers with different propensities for violence in the context of an afterschool program. By randomly assigning students to participate in the program with a set of similar or diverse peers in terms of violence, the study measures the effects of segregation or integration on students'behavioral, neurophysiological, and academic outcomes. The paper also exploits a discontinuity around the median of the propensity for violence distribution, to measure the impacts of segregation on marginal students. The results indicate that integrating students with different propensities for violence is better for highly and less violent children than segregating them. In particular, the intervention can have unintended effects on misbehavior and stress, if highly violent students are segregated and treated separately from their less violent peers. |
| Date: | 2020–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9187&r=all |
| By: | Sebastian Bervoets (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Mathieu Faure (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The stability of Nash equilibria has often been studied by examining the asymptotic behavior of the best-response dynamics. This is generally done in games where interactions are global and equilibria are isolated. In this paper, we analyze stability in contexts where interactions are local and where there are continua of equilibria. We focus on the public good game played on a network, where the set of equilibria is known to depend on the network structure (Bramoullé and Kranton, 2007), and where, as we show, continua of equilibria often appear. We provide necessary and sufficient conditions for a component of Nash equilibria to be asymptotically stable vis-à-vis the best-response dynamics. Interestingly, we demonstrate that these conditions relate to the structure of the network in a simple way. We also provide corresponding results for several dynamical systems related to the best response. |
| Keywords: | Best-response dynamics,Public good games,Stability |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02021221&r=all |