nep-net New Economics Papers
on Network Economics
Issue of 2022‒09‒26
five papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907 By Matthew Jaremski; David C. Wheelock
  2. Can desegregation close the racial gap in high school coursework? By Ritika Sethi
  3. Time Evolution of a Supply Chain Network: Kinetic Modeling By Biswajit Debnath; Rihab El-Hassani; Amit K Chattopadhyay; T Krishna Kumar; Sadhan K Ghosh; Rahul Baidya
  4. Functional Specialisation in EU Value Chains: Methods for Identifying EU Countries’ Roles in International Production Networks By Aleksandra Kordalska; Magdalena Olczyk; Roman Stöllinger; Zuzana Zavarská
  5. Redundancy of Centrality Measures in Financial Market Infrastructures By Constanza Martínez-Ventura; Ricardo Mariño-Martínez; Javier Miguélez-Márquez

  1. By: Matthew Jaremski; David C. Wheelock
    Abstract: This paper provides quantitative evidence on the interbank network’s role in transmitting the Panic of 1907 across the United States. Originating in a few New York City banks and trust companies, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of correspondent relationships shows that i) suspensions were more likely in cities whose banks had closer ties to New York, ii) banks with correspondents at the Panic’s center were more likely to close, and iii) banks responded to the panic by rearranging their correspondent relationships, with implications for network structure.
    Keywords: banking panics; interbank networks; contagion; bank closures; panic of 1907
    JEL: E42 E44 G01 G21 N11 N21
    Date: 2022–09
  2. By: Ritika Sethi
    Abstract: Black and Hispanic students are underrepresented in advanced courses. Peer composition is a potential factor driving this racial gap. In this paper, I estimate a discrete choice game with race-specific heterogenous peer effects among students in Texas high schools. I find that desegregation is likely to close this racial gap because students face larger positive peer effects from White students than their same-race peers. This decrease is likely to be more prominent for the White-Black gap because peer effects from Black students and peer effects on Hispanic students appear to be weaker.
    Date: 2022–08
  3. By: Biswajit Debnath; Rihab El-Hassani; Amit K Chattopadhyay; T Krishna Kumar; Sadhan K Ghosh; Rahul Baidya
    Abstract: Resilient supply chains are often inherently dependent on the nature of their complex interconnected networks that are simultaneously multi-dimensional and multi-layered. This article presents a Supply Chain Network (SCN) model that can be used to regulate downstream relationships towards a sustainable SME using a 4-component cost function structure - Environmental (E), Demand (D), Economic (E), and Social (S). As a major generalization to the existing practice of using phenomenological interrelationships between the EDES cost kernels, we propose a complementary time varying model of a cost function, based on Lagrangian mechanics (incorporating SCN constraints through Lagrange multipliers), to analyze the time evolution of the SCN variables to interpret the competition between economic inertia and market potential. Multicriteria decision making, based on an Analytic Hierarchy Process (AHP), ranks performance quality, identifying key business decision makers. The model is first solved numerically and then validated against real data pertaining to two Small and Medium Enterprises (SMEs) from diverse domains, establishing the domain-independent nature of the model. The results quantify how increases in a production line without appropriate consideration of market volatility can lead to bankruptcy, and how high transportation cost together with increased production may lead to a break-even state. The model also predicts the time it takes a policy change to reinvigorate sales, thereby forecasting best practice operational procedure that ensures holistic sustainability on all four sustainability fronts.
    Date: 2022–09
  4. By: Aleksandra Kordalska; Magdalena Olczyk; Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Geographically dispersed production networks have allowed countries to specialise in different functions of the value chain. By making use of two methodologies for quantifying the magnitude of functional specialisation – one based on trade flows and one based on FDI flows – detailed profiles of the functional specialisations of EU member states are identified. The analyses are conducted at the country, industry and regional level. In line with the existing literature, they reveal that EU-CEE countries are predominantly specialised in the fabrication stage, that is, they serve as ‘factory economies’, while the Western EU countries are mainly performing knowledge-intensive pre-fabrication activities – a characteristic of ‘headquarter economies’. This dualism within the EU is confirmed by a cluster analysis. While functional specialisation patterns tend to be persistent, especially in the fabrication stage, there are also some signs of functional diversification in EU-CEE countries in more recent years. Still, these functional changes remain limited to a few industries. The dichotomy of factory and headquarter economies is also clearly discernible at the regional level. However, the fact that in most EU countries – mainly in the capital regions – there are some headquarter-type regions implies that a complete functional ‘lock-in’ in fabrication is less likely than suggested by the country-level patterns. Hence, while the results point towards major difficulties of functional diversification beyond the fabrication stage in the EU-CEE countries and regions, there are also several promising elements and trends discernible, in particular at the industry and the regional level.
    Keywords: functional specialisation, global value chains, smile curve, factory economy, greenfield FDI
    JEL: F15 F21 F23 F60
    Date: 2022–08
  5. By: Constanza Martínez-Ventura; Ricardo Mariño-Martínez; Javier Miguélez-Márquez
    Abstract: The concept of centrality has been widely used to monitor systems with a network structure because it allows identifying their most influential participants.This monitoring task can be difficult if the number of system participants is considerably large or if the wide variety of centrality measures currently available produce non-coincident (or mixed) signals. This document uses principal component analysis to evaluate a set of centrality measures calculated for the financial institutions that participate in four financial market infrastructures of Colombia. The results obtained are used to construct general indices of centrality, using the strongest measures of centrality as inputs, and leaving aside those considered redundant. RESUMEN: El concepto de centralidad ha sido ampliamente utilizado para monitorear sistemas con estructura de red ya que permite identificar a los participantes más influyentes. Las labores de monitoreo pueden ser difíciles de realizar si el número de participantes en esos sistemas es considerablemente amplio o si las medidas de centralidad producen resultados no coincidentes o generan señales mixtas. Este documento usa el análisis de componentes principales para evaluar un conjunto de medidas de centralidad calculadas para las instituciones financieras que participan en cuatro infraestructuras de los mercados financieros en Colombia. Los resultados obtenidos son utilizados para construir índices generales de centralidad, utilizando como insumos las medidas de centralidad más fuertes y dejando de lado aquellas consideradas redundantes.
    Keywords: centrality, principal component analysis, redundancy analysis, clustering analysis, centralidad, análisis de componentes principales, análisis de redundancia, análisis de clustering
    JEL: G20 C38 C23
    Date: 2022–08

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