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on Network Economics |
| By: | Kenan Huremovi\'c; Federico Nutarelli; Francesco Serti; Fernando Vega-Redondo |
| Abstract: | Using data on the Spanish firm-level production network we show that firms learn about international trade opportunities and related business know-how from their production network peers. Our identification strategy leverages the panel structure of the data, import origin variation, and network structure. We find evidence of both upstream and downstream network effects, even after accounting for sectoral and geographical spillovers. Larger firms are better at absorbing valuable information but worse at disseminating it. Connections with geographically distant firms provide more useful information to start importing. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.13422&r= |
| By: | Bizzarri, Matteo; Vega-Redondo, Fernando |
| Abstract: | We characterize the firm-level welfare effects of a small change in ownership overlap, and how it depends on the position in the production network.In our model, firms compete in prices, internalizing how their decisions affect the firms lying downstream as well as those that have common share-holders. While in a horizontal economy the common-ownership effects onequilibrium prices depend on firm markups alone, in the more general casedisplaying vertical inter-firm relationships a full knowledge of the production network is typically required. Addressing then the normative questionof what are the welfare implications of affecting the ownership structure, we show that, if costs of adjusting it are large, the optimal intervention isproportional to the Bonacich centrality of each firm in the weighted networkquantifying interfirm price-mediated externalities. Finally, we also explainthat the parameters of the model can be identified from typically availabledata, hence rendering our model amenable to empirical analysis. |
| Keywords: | Production Networks; Network Games; Common Ownership; Oligopoly |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:43949&r= |
| By: | Huremovic, Kenan; Jiménez, Gabriel; Moral Benito, Enrique; Peydró, José-Luis; Vega-Redondo, Fernando |
| Abstract: | We show that bank credit shocks to firms propagate upstream and downstream along the production network, with stronger effects for upstream than downstream propagation. Our identification strategy relies on: (i) administrative datasets from Spain on supplier-customer transactions and bank loans; (ii) a standard operationalization of bank credit-supply shocks during the Global Financial Crisis; and (iii) a general equilibrium model of an interfirm production network economy with financial frictions that is structurally estimated. Our results indicate that the network propagation leads to a 50% increase in the aggregate effects of bank credit supply shocks on GDP growth, with equally important first-order versus higher-order network effects. |
| Keywords: | Supply Chains; Shock Propagation; Credit Supply; Real Effects Of Finance. |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:43952&r= |
| By: | Vega-Redondo, Fernando; Pin, Paolo; Ubfal, Diego; Benedetti, Priscilla; Domínguez, Magdalena; Rubera, Gaia; Hovy, Dirk; Fornaciari, Tommaso |
| Abstract: | Can peer interaction foster entrepreneurship in large-scale environments? This paper addresses the question empirically and theoretically. Empirically, we tested the effects of peer interaction on the number and quality of business plans submitted in a Pan-African RCT including 5, 000 entrepreneurs. Thetreatment provided the possibility of interaction in different interaction settings (face-to-face or virtual, peers being of the same or diverse nationalities). We find that, while estimated network effects are almost always strong, the treatment effect is not so and displays a non-monotone trade-off between diversity and interaction "bandwidth." We develop a model that sheds light on this behavior by differentiating between constructive and disruptive interaction. It is also qualitatively supported by our experimental evidence |
| Keywords: | Social Networks; Peer Effects; Entrepreneurship; Innovation; Semantic analysis |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:43954&r= |
| By: | Maulana, Ardian; Hokky, Situngkir |
| Abstract: | This research aims to elucidate the organizational patterns of interregional economic interdependence to enhance our comprehension of the national economy's structure at a regional scale. Employing a multilayer network model, this study represents economic interdependence among Indonesian regions, utilizing the InterRegional Input-Output (IRIO) table. Through the application of various metrics, such as degree and strength distribution, assortativity coefficient, and global and local rich club coefficient, to the multilayer IRIO network, we uncover the organizational patterns of economic exchanges between provinces and economic sectors within Indonesia. Our findings demonstrate that a multilayer network approach reveals the heterogeneous and complex structure of the national economy at the regional level. By analyzing the assortativity pattern and global rich-club coefficient, we illustrate that the IRIO network exhibits a hierarchical organization, where significant provincial-sector nodes are interconnected and form dense rich clubs, extending from a few structural cores to peripheral regions. Additionally, we identify distinct connectivity patterns of non-rich nodes based on their incoming and outgoing relations. The insights gained from this study have implications for the macro-control of regional development. |
| Keywords: | Multilayer network; Spatial network; Interregional input-output table, Rich-club phenomenon, Hierarchical organization. |
| JEL: | C1 C40 E0 H4 H7 J1 O1 O4 P0 R1 R5 Z18 |
| Date: | 2024–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121129&r= |
| By: | Tomohiro Ando; Jushan Bai; Lina Lu; Cindy M. Vojtech |
| Abstract: | We characterize the U.S. interbank liquidity risk network based on a supervisory dataset, using a scenario-based quantile network connectedness approach. In terms of methodology, we consider a quantile vector autoregressive model with unobserved heterogeneity and propose a Bayesian nuclear norm estimation method. A common factor structure is employed to deal with unobserved heterogeneity that may exhibit endogeneity within the network. Then we develop a scenario-based quantile network connectedness framework by accommodating various economic scenarios, through a scenario-based moving average expression of the model where forecast error variance decomposition under a future pre-specified scenario is derived. The methodology is used to study the quantile-dependent liquidity risk network among large U.S. bank holding companies. The estimated quantile liquidity risk network connectedness measures could be useful for bank supervision and financial stability monitoring by providing leading indicators of the system-wide liquidity risk connectedness not only at the median but also at the tails or even under a pre-specified scenario. The measures also help identify systemically important banks and vulnerable banks in the liquidity risk transmission of the U.S. banking system. |
| Keywords: | nuclear norm; Bayesian analysis; scenario-based quantile connectedness; bank supervision; financial stability |
| JEL: | C11 C31 C32 C33 C58 G21 G28 |
| Date: | 2024–04–18 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbqu:98335&r= |
| By: | Merdinger-Rumpler Caroline (HuManis Research Center, Université de Strasbourg); Paulus Odile (LaRGE Research Center, Université de Strasbourg); Bourachnikova Olga (Strasbourg Team Academy) |
| Abstract: | Investigating the nature of relations entrepreneurs have with their network stakeholders, this empirical research is based upon a specific context of student-entrepreneurs engaged in a three-years entrepreneurial team-action learning programme. The social life theory of Ingold (2017) allowed us to enlighten the nature of those relations through characteristics like the various intensities ranging from weak to strong, the type of perception student-entrepreneurs have of the stakeholder (from resource, person to support or key player), their openness to uncertainty and the transformative potential at both the inner person or the entrepreneurial project levels. Ultimately, we propose a tetratype model of relations that opens a new perspective in entrepreneurial network. |
| Keywords: | Entrepreneurship, Network, Ingold’s social life theory, Relationship model. |
| JEL: | M13 A30 I26 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:lar:wpaper:2024-05&r= |
| By: | Alice Da Fonseca; Peter Lake; Ariana Barrenechea |
| Abstract: | This project is a collaboration between industry and academia to delve into Finance Social Networks, specifically the Board of Directors of public companies. Knowing the connections between Directors and Executives in different companies can generate powerful stories and meaningful insights on investments. A proof of concept in the form of a Data Visualization tool reveals its strength in investigating corporate governance and sustainability, as well as in the partnership between industry and academic institutions. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2405.20522&r= |
| By: | Mishel Ghassibe |
| Abstract: | I develop a tractable dynamic sticky-price model, where input-output linkages are formed endogenously. The model delivers cyclical properties of networks that are consistent with those I estimate using sectoral and firm-level data, conditional on identified real and nom- inal shocks. A novel source of state dependence in nominal rigidities arises: the strength of complementarities in price setting and monetary non-neutrality increase in the number of suppliers optimally chosen by firms. As a result, the model simultaneously rationalizes the following observed non-linearities in monetary transmission. First, there is cycle dependence: the magnitude of real GDP’s response to a monetary shock is procyclical. Second, there is path dependence: non-neutrality of real GDP is higher following previous periods of loose monetary policy. Third, there is size dependence: larger monetary contractions shrink the net- work and generate a less than proportional decrease in GDP relative to smaller contractions. |
| Keywords: | monetary transmission; state dependence; endogenous production networks |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1449&r= |
| By: | Katja M. Kaufmann; Yasemin Özdemir; Michaela Paffenholz |
| Abstract: | We study whether, to what extent, and how a couple’s decision to invest into risky assets the first time is affected by their social environment, in particular by their (adult) siblings and their coworkers. We provide causal evidence of peer effects in financial decisions, making use of Dutch administrative data and an IV strategy with partially overlapping peer groups. We find that positive asset market experiences of siblings, as well as of coworkers, generate positive spillover effects in terms of first-time investments in risky assets. These effects are primarily driven by the siblings and coworkers of the male partner in the couple ("receiver" of the signal). However, coworker spillovers are also relevant for full-time employed women. In terms of "sender" of the signal, only male coworkers lead to spillovers, for the couple overall and for female and male partner separately, consistent with men being more likely to talk about their financial successes. Heterogeneity analyses show that peer spillovers are particularly important for highly (financially) educated and more privileged couples, consistent with them having the financial means as well as the (financial) knowledge to be able to evaluate and respond to the signal of positive asset market experiences of peers. |
| Keywords: | spillovers, peer effects, financial decisions, stock market participation |
| JEL: | G11 G53 G51 Z13 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_553&r= |