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on Network Economics |
| By: | Charoensook, Banchongsan |
| Abstract: | Most literature in strategic network formation shows that there is a substantial tension between stability and efficiency. In this note, I show that such is not the case in the two way flow model with small decay studied by Bala and Goyal (2000a) and De Jaegher and Kamphorst (2015). Specifically, I show that every link receiver in a Nash network serves as an efficient trans-mitter of information. I also generalize this result to the case of player hetero-geneity and then provide a fine-detail characterization of effiicient networks. |
| Keywords: | Industrial Organization, Research Methods/ Statistical Methods |
| Date: | 2022–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemwp:324041&r= |
| By: | Panova, Elena |
| Abstract: | We consider the problem of sharing the cost of efficient uncongested tree-network among users with differentiated willingness to pay for the good supplied through the network. We nd that the associated value sharing problem is convex, hence, the core is large and we axiomatize a new, computationally simple core selection based on the idea of proportionality. |
| Keywords: | sharing network cost; core; proportional allocation |
| JEL: | C71 |
| Date: | 2022–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127271&r= |
| By: | Mr. Nathan Porter; Mr. Camilo E Tovar Mora; Mr. Juan P Trevino; Johannes Eugster; Theofanis Papamichalis |
| Abstract: | The world has become more interconnected over the past few decades. Against this backdrop, economic and financial contagion following adverse shocks can have a severe impact on the global economy. How systemic can the effects of contagion be? What specific transmission channels are involved? What is their relative importance? We address these questions using a multilayered global network model of contagion that simulates the impact of sovereign debt default on the global economy. We also develop a measure of global systemic risk and use bank stress testing techniques to quantify the systemic impact of the shock and the extent of contagion on the global economy. Our model shows that economic and financial contagion are highly non-linear, and many bystander economies can experience significant negative effects as the initial default is spread through the network. This suggests that many economies might be systemically more important than what conventional measures of size or openness might suggest. |
| Keywords: | Network; Contagion; Crises; Stress-test |
| Date: | 2022–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2022/171&r= |
| By: | Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger Mueller |
| Abstract: | This paper shows that local productivity spillovers can propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we find that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, which belong to multi-region firms that are exposed to the local productivity spillover through one of their plants. To quantify the significance of plant-level networks for the propagation and amplification of local productivity shocks, we develop and estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Counterfactual exercises show that while knowledge sharing through plant-level networks amplifies the aggregate effects of local productivity shocks, it can widen economic disparities between workers and regions in the economy. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:22-32&r= |
| By: | Corrado DI GUILMI; FUJIWARA Yoshi |
| Abstract: | The paper presents an investigation on how the upward transmission of demand shocks in the Japanese supply network influences the growth rates of firms and, consequently, shapes their size distribution. Through an empirical analysis, analytical decomposition of the growth rates' volatility, and numerical simulations, we obtain several original results. We find that the Japanese supply network has a bow-tie structure in which firms located in the upstream layers display a larger volatility in their growth rates. As a result, the Gibrat's law breaks down for upstream firms, whereas downstream firms are more likely to be located in the power law tail of the size distribution. This pattern is determined by the amplification of demand shocks hitting downstream firms, and the magnitude of this amplification depends on the network structure and on the relative market power of downstream firms. Finally, we observe that in an almost perfectly hierarchical network, the power-law tail in firm size distribution disappears. The paper shows that aggregate demand shocks can affect the economy directly through the reduction in output for downstream firms and indirectly by shaping the firm size distribution. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22082&r= |
| By: | Jiri Teichman (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | The study uses network measures and visualisation to show alternative ways of exploring international trade and its structure. We specifically focus on trade networks in the largest export categories of the Czech Republic. Our results show the rising importance of the Czech Republic in the selected categories as measured by the trade weighted degree centrality. However, in several categories, this is not complemented by a similar increase in the number of trade partners. This lack of diversification could be a possible risk for Czech trade. While the results in categories related to electronics and information technologies showed increasing importance of China, categories connected to car manufacturing remain dominated by Germany and the United States. |
| Keywords: | Czech trade, international trade, network theory, trade networks |
| JEL: | F13 F14 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2022_22&r= |
| By: | Juliana Londoño-Vélez |
| Abstract: | Does diversity affect people’s perceptions of income distribution and their preferences for redistribution? I leverage variation from a Colombian financial aid reform boosting the share of low-income students at an elite university. Combining college records and original survey data, I study how diversity affects high-income students’ social networks, perceptions, and preferences by exploiting treatment variation across cohorts and majors using difference-in-differences. Exposure to low-income peers caused high-income students to diversify their social networks, have more accurate perceptions of the income distribution, and support progressive redistribution. My preferred interpretation is that diversity raised students’ concerns about (the lack of) equal opportunity. |
| JEL: | D31 D63 I22 I24 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30386&r= |
| By: | Kazuya Suzuki (Bank of Japan); Kana Sasamoto (Bank of Japan) |
| Abstract: | Given the absence of comprehensive studies on market structure and haircuts for repo and securities lending transactions, this study provides a quantitative analysis of the subject using government bonds and equities transaction data covering most of the Japanese market. Specifically, we conducted a panel data regression analysis of government bond repo transactions, controlling for factors such as transaction entities and transaction types, and provided a detailed analysis of the haircut-setting mechanism. Accordingly, we determined that explanatory variables affecting credit risk, market risk, and liquidity risk, such as the credit quality of government bonds, the residual maturity of government bonds, and the presence of foreign exchange risk, significantly impact haircut setting. Furthermore, financial institutions closer to the center of the network, which engage in transactions with additional financial institutions, tend to set lower haircut rates through more efficient matching of borrowing and lending needs for cash and securities. Thus, the credit quality of government bonds transacted, exchange rate stability, and the presence of intermediaries important to the trading network significantly impact the degree of market functioning. The results were robust, paving the way for further discussions on trends and risk management of securities financing transactions, which are essential to financial markets. |
| Keywords: | Securities Financing Transactions; Repurchase Agreement; Haircut; Network Analysis |
| JEL: | D80 E43 G10 G20 L14 |
| Date: | 2022–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp22e13&r= |