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on Network Economics |
| By: | Komla M. Agudze (World Bank Group, Washington, US); Monica Billio (Ca' Foscari University of Venice, Italy); Roberto Casarin (Ca' Foscari University of Venice, Italy); Francesco Ravazzolo (Free University of Bozen-Bolzano, Italy; BI Norwegian Business School, Norway) |
| Abstract: | This paper introduces a new dynamic panel model with multi-layer network effects. Series-specific latent Markov chain processes drive the dynamics of the observable processes, and several types of interaction effects among the hidden chains allow for various degrees of endogenous synchronization of both latent and observable processes. The interaction is driven by a multi-layer network with exogenous and endogenous connectivity layers. We provide some theoretical properties of the model, develop a Bayesian inference framework and an efficient Markov Chain Monte Carlo algorithm for estimating parameters, latent states, and endogenous network layers. An application to the US-state coincident indicators shows that the synchronization in the US economy is generated by network effects among the states. The inclusion of a multi-layer network provides a new tool for measuring the effects of the public policies that impact the connectivity between the US states, such as mobility restrictions or job support schemes. The proposed new model and the related inference are general and may find application in a wide spectrum of datasets where the extraction of endogenous interaction effects is relevant and of interest. |
| Keywords: | Bayesian inference; interacting Markov chains; multi-layer networks; panel Markov-switching. |
| JEL: | C11 C13 C15 C23 C55 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps82&r=all |
| By: | Victor Aguirregabiria (University of Toronto); Jiaying Gu (University of Toronto); Yao Luo (University of Toronto); Pedro Mira (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paper presents a dynamic structural model to evaluate economic and public health effects of the difusion of COVID-19, as well as the impact of factual and counterfactual public policies. Our framework combines a SIR epidemiological model of virus difusion with a structural game of network production and social interactions. The economy comprises three types of geographic locations: homes, workplaces, and consumption places. Each individual has her own set of locations where she develops her life. The combination of these sets for all the individuals determines the economy's production and social network. Every day, individuals choose to work and consume either outside (with physical interaction with other people) or remotely (from home, without physical interactions). Working (and consuming) outside is more productive and generates stronger complementarities (positive externality). However, in the presence of a virus, working outside facilitates infection and the diffusion of the virus (negative externality). Individuals are forward-looking. We characterize an equilibrium of the dynamic network game and present an algorithm for its computation. We describe the estimation of the parameters of the model combining several sources of data on COVID-19 in Ontario, Canada: daily epidemiological data; hourly electricity consumption data; and daily cell phone data on individuals' mobility. We use the model to evaluate the health and economic impact of several counterfactual public policies: subsidies for working at home; testing policies; herd immunity; and changes in the network structure. These policies generate substantial differences in the propagation of the virus and its economic impact. |
| Keywords: | COVID-19, virus difusion, dynamics, production and social networks, production externalities, public health. |
| JEL: | C57 C73 L14 L23 I18 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2020_2014&r=all |
| By: | Vollan, Björn (University of Marburg); Hadnes, Myriam (workshops work); Nilgen, Marco (University of Marburg); Kosfeld, Michael (Goethe University Frankfurt) |
| Abstract: | We conducted a field experiment in Burkina Faso to investigate the impact of sharing obligations within kin networks on entrepreneurial effort. The overall treatment effect we find is insignificant and goes in the opposite direction than previous literature suggests. Ex-post explorative analysis reveals that entrepreneurs in the two experimental groups reacted differently in their production process, with some entrepreneurs in the treatment group being able to utilize their kin network to their joint advantage. |
| Keywords: | field experiment, redristributive pressure, social norms, sharing norms, business development, Burkina Faso |
| JEL: | C93 D13 H24 H26 O12 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14147&r=all |
| By: | Sascha O. Becker; Volker Lindenthal; Sharun Mukand; Fabian Waldinger |
| Abstract: | We study the role of professional networks in facilitating the escape of persecuted academics from Nazi Germany. From 1933, the Nazi regime started to dismiss academics of Jewish origin from their positions. The timing of dismissals created individual-level exogenous variation in the timing of emigration from Nazi Germany, allowing us to estimate the causal effect of networks for emigration decisions. Academics with ties to more colleagues who had emigrated in 1933 or 1934 (early émigrés) were more likely to emigrate. The early émigrés functioned as “bridging nodes” that helped other academics cross over to their destination. Furthermore, we provide some of the first empirical evidence of decay in social ties over time. The strength of ties also decays across space, even within cities. Finally, for high-skilled migrants, professional networks are more important than community networks. |
| Keywords: | professional networks, high-skilled emigration, Nazi Germany, Jewish academics, universities |
| JEL: | I20 I23 I28 J15 J24 N30 N34 N40 N44 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8916&r=all |
| By: | Marco F. Boretto; Fausto Cavalli; Ahmad Naimzada |
| Abstract: | We propose a model to describe and study the effect of social interdependent preferences in a Cournot oligopoly based on a game in which the utility functions of firms depend on a combination of weighted profits of their competitors. If social interaction is neglected, the model reduces to the classic Cournot game, diverting from it as the role of social interaction becomes more and more relevant. Several synthetic measures are proposed to summarize the overall behavior of the agents and some configurations characterized by particular interactional structures are presented. Finally, the study of the well-posedness of the proposed framework is investigated, in terms of the existence and uniqueness of Nash equilibria. To this end, we generalize the conditions under which the existence and/or uniqueness of Nash equilibrium in classic game is guaranteed for particular Cournotian oligopoly models without interdependent preferences. In particular, we focus on two families of oligopolies, respectively consisting of "concave" oligopolies and oligopolies with isoelastic demand function. |
| Keywords: | Cournot Game, Preference interdependence, Network, Nash Equilibrium, existence and uniqueness |
| JEL: | D43 C62 C70 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:462&r=all |
| By: | A. James O'Malley; Thomas A. Bubolz; Jonathan S. Skinner |
| Abstract: | Many studies have examined the diffusion of health care innovations but less is known about the diffusion of health care fraud. In this paper, we consider the diffusion of potentially fraudulent Medicare home health care billing in the United States during 2002-16, with a focus on the 21 hospital referral regions (HRRs) covered by local Department of Justice anti-fraud “strike force” offices. We hypothesize that patient-sharing across home health care agencies provides a mechanism for the rapid diffusion of fraudulent strategies; we measure such activity using a novel bipartite mixture (or BMIX) network index. First, we find a remarkable increase in home health care activity between 2002 and 2009 in some but not all regions; average billing per Medicare enrollees in McAllen TX and Miami increased by $2,127 and $2,422 compared to a $289 increase in other HRRs not targeted by the Department of Justice. Second, we establish that the HRR-level BMIX (but not other network measures) was a strong predictor of above-average home care expenditures across HRRs. Third, within HRRs, agencies sharing more patients with other agencies were predicted to increase spending the following year. Finally, the initial 2002 BMIX index was a strong predictor of subsequent changes in HRR-level home health billing during 2002-9. These results highlight the importance of bipartite network structure in diffusion and in infection models more generally. |
| JEL: | I1 K42 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28560&r=all |
| By: | Javier García-Brazales (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Differences in academic achievement across Indian castes are both large and persistent. I make use of rich individual data to explore how class caste composition affects academic progress as well as the mechanisms in place. Benefiting from exogenous assignment of students to classes and teachers, I find that a one-percentage point increase in the proportion of low-caste class- mates leads to a fall of around 2% of a standard deviation in the mathematics score and to much smaller effects in English. This phenomenon is mediated through lower effort exerted by the students, which itself emanates from the students' worsened perception about the extent to which their teachers value them. This non-cognitive channel, which has not been previously identified in the peer effects literature, suggests that the use of a fairly malleable input such as more open and receptive teachers among low-caste students would be an appropriate policy response. |
| Keywords: | Castes, peer effects, non-cognitive skills, India. |
| JEL: | I24 J15 J24 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2020_2018&r=all |
| By: | Wang, Tianxi |
| Abstract: | As a means of payment, bank liability circulates in a cycle. A fraction of one bank's liability naturally flows out to another, creating a network of interbank connections. We demonstrate how this network is determined by the production technologies, the resources distribution and the Input-Output network of the real economy. We find banks with a smaller outflow fraction see their funding costs less dependent on the interbank interest rate; the heterogeneity in banks' outflow fraction causes lending ine¢ ciency; and the identities of depositors and borrowers matter. These results will not arise if banks are modelled as intermediaries of loanable funds. |
| Keywords: | circulation of bank liability, interbank network, outflow fraction, identities of depositors and borrowers |
| Date: | 2021–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:30021&r=all |