nep-net New Economics Papers
on Network Economics
Issue of 2022‒04‒11
four papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Loss Aversion and Conspicuous Consumption in Networks By Yann Bramoullé; Christian Ghiglino
  2. Optimal Liquidity Control and Systemic Risk in an Interbank Network with Liquidity Shocks and Regime-dependent Interconnectedness By Chotipong Charoensom; Thaisiri Watewai
  3. Research networks and publications in Economics. Evidence from a small developing country. By Verónica Amarante; Marisa Bucheli; Mariana Rodríguez Vivas
  4. Venture capital investments through the lens of network and functional data analysis By Christian Esposito; Marco Gortan; Lorenzo Testa; Francesca Chiaromonte; Giorgio Fagiolo; Andrea Mina; Giulio Rossetti

  1. By: Yann Bramoullé (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Christian Ghiglino (Department of Economics, Essex University, UK)
    Abstract: We introduce loss aversion into a model of conspicuous consumption in networks. Agents allocate their income between a standard good and a status good to maximize a Cobb-Douglas utility. Agents interact over a connected network and compare their status consumption to their neighbors' average consumption. Loss aversion has a profound impact. If loss aversion is large enough relative to income heterogeneity, a continuum of Nash equilibria appears and all agents consume the same quantity of status good. Otherwise, there is a unique Nash equilibrium and richest agents earn strict status gains while poorest agents earn strict status losses.
    Keywords: loss Aversion, conspicuous consumption, social networks
    Date: 2022–04
  2. By: Chotipong Charoensom; Thaisiri Watewai
    Abstract: We propose a novel interbank network model in which banks face systemic liquidity shocks, fight-to-quality liquidity flows, and collapses of the interbank network during crises, and study their impacts on the optimal liquidity control and the systemic risk of the interbank network. We find that banks respond to negative shocks by holding positive precautionary liquidity, but once the shock size is sufficiently large, the benefit of precautionary liquidity reduces, and banks lower their precautionary liquidity. Lending (borrowing) banks also hold positive (negative) interbank liquidity provision. Banks hold more provision for more interconnected networks, but when the network is too interconnected, it is too costly to hold large provision, causing banks to lower the provision. On the contrary, a higher degree of the fight-to-quality effect tends to make banks act more aggressively on both precautionary liquidity and interbank provision. As a result, the systemic risk tends to increase in the size of the negative shock, but is quite insensitive to the degree of the fight-to-quality effect. Our analysis shows that the systemic risk increases if the interbank market collapses or becomes too interconnected during crises. Rewards and penalties from regulators can help reduce the systemic risk, but they come with a cost and have different implications on the banks' optimal policies.
    Keywords: Liquidity shock; Interbank Interconnectedness; Fight-to-quality; Systemic risk; Precautionary liquidity; Interbank liquidity provision; Regime switching; Stochastic control
    Date: 2022–03
  3. By: Verónica Amarante (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Marisa Bucheli (Universidad de la República (Uruguay). Facultad de Ciencias Sociales. Departamento de Economía); Mariana Rodríguez Vivas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This article addresses the relationship between international research collaboration and the performance of researchers through the focus on a specific discipline -Economics- in a small developing country -Uruguay-. We map the collaboration between Uruguayan economists and non-local researchers and analyze the correlation between these collaborations and scholars’ achievements, as reflected by the quality of the publications included in Scopus-Elsevier. Our results confirm the positive and significant association between research collaboration and research output. Researchers from a developing country involved in international collaborations get a higher impact or quality of their research, but this result holds only when international collaborations involve researchers located in northern countries.
    Keywords: research networks, research output, bibliometrics
    JEL: A14 I23
    Date: 2021–12
  4. By: Christian Esposito; Marco Gortan; Lorenzo Testa; Francesca Chiaromonte; Giorgio Fagiolo; Andrea Mina; Giulio Rossetti
    Abstract: In this paper we characterize the performance of venture capital- backed firms based on their ability to attract investment. The aim of the study is to identify relevant predictors of success built from the network structure of firms' and investors' relations. Focusing on deal-level data for the health sector, we first create a bipartite network among firms and investors, and then apply functional data analysis (FDA) to derive progressively more refined indicators of success captured by a binary, a scalar and a functional outcome. More specifically, we use different network centrality measures to capture the role of early investments for the success of the firm. Our results, which are robust to different specifications, suggest that success has a strong positive association with centrality measures of the firm and of its large in- vestors, and a weaker but still detectable association with centrality measures of small investors and features describing firms as knowl- edge bridges. Finally, based on our analyses, success is not associated with firms' and investors' spreading power (harmonic centrality), nor with the tightness of investors' community (clustering coefficient) and spreading ability (VoteRank).
    Keywords: Network analysis; functional data analysis; venture capital; investment trajectory.
    Date: 2022–02–28

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