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on Network Economics |
| By: | Nakov, Anton; Ghassibe, Mishel |
| Abstract: | Business cycles with pronounced inflation can have sectoral origins and often feature a growing share of price-adjusting firms. Rationalizing such phenomena requires enhancing our modeling toolkit. We do that by building a non-linear equilibrium multi-sector framework featuring a general input-output network and optimal decisions on the timing and size of price adjustments. The interaction of our ingredients creates equilibrium cascades: large movements in aggregates trigger price adjustment decisions on the extensive margin. Following demand shocks, such as monetary interventions, networks dampen cascades, thus slowing down price adjustment decisions and giving central banks substantial power to stimulate the real economy with limited inflationary consequences. In contrast, under supply shocks, networks amplify cascades, leading to fast increases in the frequency of repricing and large inflationary swings. Applied to Euro Area data, the interaction of networks with cascades allows to quantitatively match the surges in inflation and repricing frequency in the post-Covid era. JEL Classification: E31, E32 |
| Keywords: | large shocks, menu costs, networks, non-linear business cycles |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253123 |
| By: | Gaul, Johannes; Schrader, Pascal |
| Abstract: | We study the relationship between investors' social media activity and earnings announcement returns. To distinguish between information contained in peer-to-peer interaction and user-posted content, we analyze conversation networks on Reddit using centrality metrics from network science and classify user sentiment with large language models. We show that pre-announcement sentiment is positively associated with short-term cumulative abnormal returns only if it does not spark pre-announcement controversy. If pre-announcement controversy arises, we document a negative association. Our findings present a more nuanced view on the wisdom of crowds hypothesis, highlighting that peer-to-peer interaction on social media exhibits a pattern of normalization, and thus contains informational value beyond content. |
| Keywords: | Information Processing, Reddit Wallstreet Bets, Wisdom of Crowds, Conversation Networks, Large Language Models, Eigenvector Centrality, High-frequency Data |
| JEL: | G12 G14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:327108 |
| By: | Cubel Montesinos, Antonio; Solaz, Marta; Sanchís Llopis, M. Teresa |
| Abstract: | This paper studies the pattern of world trade in capital goods during the two key decades following World War II (1954-1973) by applying the Network Analysis methodology to study world trade as proposed by De Benedictis and Tajoli (2011). Departing from the technological superiority of US and Germany in machinery and transport equipment industries, their role asthe world main exporters is unquestionable. However, their relative presence in the world market, and more specifically in the European market, changed along the Golden Age period. While exports from the US dominated the European markets in the aftermath of the Second World War, the way the reconstruction was addressed and the new order favorable to tradeliberalization consolidated a network less dependent on the quasi-aboslute dominace of the United States prevailing after the war. |
| Keywords: | Bilateral trade; Equipment; Golden Age; Network analysis |
| JEL: | F43 F21 O33 O51 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:cte:whrepe:48102 |
| By: | Victor Le Coz (LadHyX - Laboratoire d'hydrodynamique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique, MICS - Mathématiques et Informatique pour la Complexité et les Systèmes - CentraleSupélec - Université Paris-Saclay); Michael Benzaquen (LadHyX - Laboratoire d'hydrodynamique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique, CFM - Capital Fund Management); Damien Challet (MICS - Mathématiques et Informatique pour la Complexité et les Systèmes - CentraleSupélec - Université Paris-Saclay, FiQuant - Chaire de finance quantitative - MICS - Mathématiques et Informatique pour la Complexité et les Systèmes - CentraleSupélec - Université Paris-Saclay) |
| Abstract: | We propose a minimal model of the secured interbank network able to shed light on recent money markets puzzles. We find that excess liquidity emerges due to the interactions between the reserves and liquidity ratio constraints; the appearance of evergreen repurchase agreements and collateral re-use emerges as a simple answer to banks' counterparty risk and liquidity ratio regulation. In line with prevailing theories, re-use increases with collateral scarcity. In our agent-based model, banks create money endogenously to meet the funding requests of economic agents. The latter generate payment shocks to the banking system by reallocating their deposits. Banks absorbs these shocks thanks to repurchase agreements, while respecting reserves, liquidity, and leverage constraints. The resulting network is denser and more robust to stress scenarios than an unsecured one; in addition, the stable bank trading relationships network exhibits a core-periphery structure. Finally, we show how this model can be used as a tool for stress testing and monetary policy design. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05273328 |