nep-net New Economics Papers
on Network Economics
Issue of 2022‒04‒25
seven papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Peer Effects in the Workplace: A Network Approach By Lindquist, Matthew J.; Sauermann, Jan; Zenou, Yves
  2. FinTech Lending, Social Networks and the Transmission of Monetary Policy By Xiaoqing Zhou
  3. Technology network structure conditions the economic resilience of regions By Gergõ Tóth; Zoltán Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler
  4. Bayesian Estimation of Multivariate Panel Probits with Higher-Order Network Interdependence and an Application to Firms' Global Market Participation in Guangdong By Badi H. Baltagi; Peter H. Egger; Michaela Kesina
  5. Demand Shock Propagation Through an Input-output Network in Japan By ARATA Yoshiyuki; MIYAKAWA Daisuke
  6. From integrated to fragmented elites. The core of Swiss elite networks 1910–2015 By Rossier, Thierry; Ellersgaard, Christoph Houman; Larsen, Anton Grau; Lunding, Jacob Aagaard
  7. Information Preferences of Individual Agents in Linear-Quadratic-Gaussian Network Games By Furkan Sezer; Ceyhun Eksin

  1. By: Lindquist, Matthew J. (SOFI, Stockholm University); Sauermann, Jan (IFAU); Zenou, Yves (Monash University)
    Abstract: We study both endogenous and exogenous peer effects in worker productivity using an explicit network approach. We apply this method to data from an in-house call center of a multinational mobile network operator that include detailed information on individual performance. We find that a 10% increase in average co-worker current productivity increases worker productivity by 5.3%. A 10% increase in average co-worker permanent productivity decreases worker productivity by 3.2%. Older workers, low tenure workers, and low-permanent productivity workers respond the most to changes in co-worker productivity. These workers free ride in the presence of co-workers from the top quartile of the distribution of permanent productivity. Counterfactual exercises demonstrate how managers could mitigate the problem of free riding by re-shuffling workers into different co-worker networks.
    Keywords: peer effects, endogenous peer effects, exogenous peer effects, social networks, worker productivity
    JEL: J24 M50
    Date: 2022–03
  2. By: Xiaoqing Zhou
    Abstract: One of the main channels through which monetary policy stimulus affects the real economy is mortgage borrowing. This channel, however, is weakened by frictions in the mortgage market. The rapid growth of financial technology-based (FinTech) lending tends to ease these frictions, given the higher quality services provided under this new lending model. This paper establishes that the role of FinTech lending in the monetary policy transmission is further amplified by consumers’ social networks. I provide empirical evidence for this network effect using county-level data and novel identification strategies. A 1 pp increase in the FinTech market share in a county’s socially connected markets raises the county’s FinTech market share by 0.23-0.26 pps. Moreover, I find that in counties where FinTech market penetration is high, the pass-through of market interest rates to borrowers is more complete. To quantify the role of FinTech lending and its network propagation in the transmission of monetary policy shocks, I build a multi-region heterogeneous-agent model with social learning that embodies key features of FinTech lending. The model shows that the responses of consumption and refinancing to a monetary stimulus are 13% higher in the presence of FinTech lending. Almost half of this improvement is accounted for by FinTech propagation through social networks.
    Keywords: FinTech; social networks; mortgage; monetary policy; regional transmission
    JEL: E21 E44 E52 G21 G23
    Date: 2022–03–25
  3. By: Gergõ Tóth (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Zoltán Elekes (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Centre for Regional Science at Umea University, Umea University, 901 87 Umea, Sweden); Adam Whittle (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Changjun Lee (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland andDepartment of Media and Social Informatics, Hanyang University, Ansan-si, South Korea); Dieter F. Kogler (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland Insight Centre for Data Analytics, University College Dublin, Belfield, Dublin 4, Ireland)
    Abstract: This paper assesses the network robustness of the technological capability base of 269 European metropolitan areas against the potential elimination of some of their capabilities. By doing so it provides systematic evidence on how network robustness conditioned the economic resilience of these regions in the context of the 2008 economic crisis. The analysis concerns calls in the relevant literature for more in-depth analysis on the link between regional economic network structures and the resilience of regions to economic shocks. By adopting a network science approach that is novel to economic geographic inquiry, the objective is to stress-test the technological resilience of regions by utilizing information on the co-classification of CPC classes listed on European Patent Office patent documents. We find that European metropolitan areas show heterogeneous levels of technology network robustness. Further findings from regression analysis indicate that metropolitan regions with a more robust technological knowledge network structure exhibit higher levels of resilience with respect to changes in employment rates. This finding is robust to various random and targeted elimination strategies concerning the most frequently combined technological capabilities. Regions with high levels of employment in industry but with vulnerable technological capability base are particularly challenged by this aspect of regional economic resilience.
    Keywords: regional economic resilience, network robustness, metropolitan regions, technology space
    JEL: C53 O30 R11
    Date: 2022–01
  4. By: Badi H. Baltagi; Peter H. Egger; Michaela Kesina
    Abstract: This paper proposes a Bayesian estimation framework for panel-data sets with binary dependent variables where a large number of cross-sectional units is observed over a short period of time, and cross-sectional units are interdependent in more than a single network domain. The latter provides for a substantial degree of flexibility towards modelling the decay function in network neighbourliness (e.g., by disentangling the importance of rings of neighbors) or towards allowing for several channels of interdependence whose relative importance is unknown ex ante. Besides the flexible parameterization of cross-sectional dependence, the approach allows for simultaneity of the equations. These features should make the approach interesting for applications in a host of contexts involving structural and reduced-form models of multivariate choice problems at micro-, meso-, and macroeconomic levels. The paper outlines the estimation approach, illustrates its suitability by simulation examples, and provides an application to study exporting and foreign ownership among potentially interdependent firms in the specialized and transport machinery sector in the province of Guangdong.
    Keywords: network models, spatial models, higher-order network interdependence, multivariate panel probit, Bayesian estimation, firm-level data, Chinese firms
    JEL: C11 C31 C35 F14 F23 L22 R10
    Date: 2022
  5. By: ARATA Yoshiyuki; MIYAKAWA Daisuke
    Abstract: Recent studies (e.g., Acemoglu et al (2012)) show that micro-level shocks propagate through an input-output network and result in aggregate fluctuations. While most previous studies report the propagation of shocks from upstream, we know little about how shocks propagate from downstream. Focusing on the sharp decline in exports from Japan during the global financial crisis and in consumption of food and accommodation services during the COVID-19 pandemic, we empirically examine how these demand shocks propagate from customers to suppliers through a firm-level input-output network. We find that the propagation of demand shocks depends on firm size and, in particular, on the mutual importance of the transaction relationship. For the case of the global financial crisis, negative demand shocks propagate from large exporters to larger suppliers because they regarded each other as their main transaction partners. In contrast, while small suppliers regarded these large exporters as their main partners, larger exporters do not see the small suppliers that way, and thus, the propagation via these transaction relationships is limited. For the case of the pandemic, negative demand shocks are transmitted from small customers even to their small suppliers. This is because many suppliers of firms that belong to pandemic-affected sectors are small, yet they are viewed as the main transaction partners by their customers. These results suggest that the mutual importance of transaction relationships determines the heterogeneity of the demand-shock propagation.
    Date: 2022–03
  6. By: Rossier, Thierry; Ellersgaard, Christoph Houman; Larsen, Anton Grau; Lunding, Jacob Aagaard
    Abstract: This article focuses on historical elite dynamics and investigates elites' integration over time. We describe the changing relations and composition of the central circles in Swiss elite networks at seven benchmark years between 1910 and 2015 by relying on 22,262 elite individuals tied to 2587 organizations among eight key sectors, and identify for each year the most connected core of individuals. We explore network cohesion and sectoral bridging of the elite core and find that it moved from being a unitary corporate elite, before 1945, to an integrated corporatist elite, between the 1950s and 1980s, before fragmenting into a loose group, with an increased importance of corporate elites, in the 1990s onwards. The core was always dominated by business and their forms of legitimacy but, at times of crisis to the hegemony of corporate elites, after the Second World War and (only) shortly after the 2008 financial crisis, elite circles expanded and included individuals with delegated forms of power, such as politicians and unionists. In the most recent cohort (2015), the share of corporate elites in the core is similar to the one before the First World War and during the interwar period. This return to the past echoes findings on wealth inequality and economic capital accumulation by a small group of individuals organized around the most powerful companies.
    Keywords: coordination; elites; historical sociology; inequality; networks; social networks; Swiss National Science Foundation within the frame of the “The Swiss Power Elite and Field of Power. Tensions between Elite Coordination and Differentiation since the 1950s” research project (grant number: 181258); and by the Independent Research Fund Denmark within the frame of the LONGLINKS project (grant number: 8019‐00021B
    JEL: N0
    Date: 2022–02–14
  7. By: Furkan Sezer; Ceyhun Eksin
    Abstract: We consider linear-quadratic-Gaussian (LQG) network games in which agents have quadratic payoffs that depend on their individual and neighbors' actions, and an unknown payoff-relevant state. An information designer determines the fidelity of information revealed to the agents about the payoff state to maximize the social welfare. Prior results show that full information disclosure is optimal under certain assumptions on the payoffs, i.e., it is beneficial for the average individual. In this paper, we provide conditions based on the strength of the dependence of payoffs on neighbors' actions, i.e., competition, under which a rational agent is expected to benefit, i.e., receive higher payoffs, from full information disclosure. We find that all agents benefit from information disclosure for the star network structure when the game is symmetric and submodular or supermodular. We also identify that the central agent benefits more than a peripheral agent from full information disclosure unless the competition is strong and the number of peripheral agents is small enough. Despite the fact that all agents expect to benefit from information disclosure ex-ante, a central agent can be worse-off from information disclosure in many realizations of the payoff state under strong competition, indicating that a risk-averse central agent can prefer uninformative signals ex-ante.
    Date: 2022–03

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