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on Network Economics |
| By: | Francis Bloch; Bhaskar Dutta; Marcin Dziubi\'nski |
| Abstract: | We propose and study a model of strategic network design and exploration where the hider, subject to a budget constraint restricting the number of links, chooses a connected network and the location of an object. Meanwhile, the seeker, not observing the network and the location of the object, chooses a network exploration strategy starting at a fixed node in the network. The network exploration follows the expanding search paradigm of Alpern and Lidbetter (2013). We obtain a Nash equilibrium and characterize equilibrium payoffs in the case of linking budget allowing for trees only. We also give an upper bound on the expected number of steps needed to find the hider for the case where the linking budget allows for at most one cycle in the network. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.16994 |
| By: | Tatsuru Kikuchi |
| Abstract: | This paper develops a continuous functional framework for analyzing contagion dynamics in financial networks, extending the Navier-Stokes-based approach to network-structured spatial processes. We model financial distress propagation as a diffusion process on weighted networks, deriving a network diffusion equation from first principles that predicts contagion decay depends on the network's algebraic connectivity through the relation $\kappa = \sqrt{\lambda_2/D}$, where $\lambda_2$ is the second-smallest eigenvalue of the graph Laplacian and $D$ is the diffusion coefficient. Applying this framework to European banking data from the EBA stress tests (2018, 2021, 2023), we estimate interbank exposure networks using maximum entropy methods and track the evolution of systemic risk through the COVID-19 crisis. Our key finding is that network connectivity declined by 45\% from 2018 to 2023, implying a 26\% reduction in the contagion decay parameter. Difference-in-differences analysis reveals this structural change was driven by regulatory-induced deleveraging of systemically important banks, which experienced differential asset reductions of 17\% relative to smaller institutions. The networks exhibit lognormal rather than scale-free degree distributions, suggesting greater resilience than previously assumed in the literature. Extensive robustness checks across parametric and non-parametric estimation methods confirm declining systemic risk, with cross-method correlations exceeding 0.95. These findings demonstrate that post-COVID-19 regulatory reforms effectively reduced network interconnectedness and systemic vulnerability in the European banking system. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.19630 |
| By: | Matteo Bizzarri (University of Naples Federico II and CSEF); Marco Pangallo (CENTAI Institute); Francisco Queirós (ISEG - Lisbon School of Economics and Management) |
| Abstract: | We study how sector-specific shocks propagate in a production economy with input-output linkages and heterogeneous time to build. We show that, depending on the sector and network characteristics, one-time idiosyncratic shocks can induce a non-monotonic response of aggregate output as it converges back to steady state– a phenomenon we term ’endogenous oscillations’ – and get amplified over time. We study the conditions on the network structure that generate this behavior. We introduce a measure to quantify the magnitude of such endogenous oscillations generated by a single small productivity shock. We quantify the model on US input-output data, showing that for some sectors a single shock can generate aggregate fluctuations. In particular, the magnitude of oscillations is twice as large as it would be if convergence to the steady state were always monotonic. |
| Keywords: | Endogenous Oscillations, Business Cycles, Production Networks |
| JEL: | C67 D57 D85 E23 E32 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:764 |
| By: | Peng Liu |
| Abstract: | Financial networks based on Pearson correlations have been intensively studied. However, previous studies may have led to misleading and catastrophic results because of several critical shortcomings of the Pearson correlation. The local Gaussian correlation coefficient, a new measurement of statistical dependence between variables, has unique advantages including capturing local nonlinear dependence and handling heavy-tailed distributions. This study constructs financial networks using the local Gaussian correlation coefficients between tail regions of stock returns in the Shanghai Stock Exchange. The work systematically analyzes fundamental network metrics including node centrality, average shortest path length, and entropy. Compared with the local Gaussian correlation network among positive tails and the conventional Pearson correlation network, the properties of the local Gaussian correlation network among negative tails are more sensitive to the stock market risks. This finding suggests researchers should prioritize the local Gaussian correlation network among negative tails. Future work should reevaluate existing findings using the local Gaussian correlation method. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.21165 |
| By: | Max Stick; Maciej Karpinski; Christoph Schimmele; Amélie Arsenault |
| Abstract: | This study used data from the 2020 General Social Survey to examine the social connectedness of immigrant women to Canadian society. The size and composition of immigrant women’s personal networks varied by their sociodemographic, immigrant-specific and residential characteristics, and by population group. Most subgroups of immigrant women had smaller social networks than their Canadian-born counterparts, although for some, the difference was small. Most of the differences between immigrants and Canadian-born women were related to weak ties, and for most subgroups there were no or fewer differences in the number of strong ties that composed their networks. Most subgroups of immigrant women had more inter-ethnic friends than Canadian-born women, even though their networks were mostly homogenous in ethnic composition. |
| Keywords: | Immigrant women, social networks, social capital, immigrant integration |
| JEL: | J23 M21 |
| Date: | 2024–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202400400006e |
| By: | Mishel Ghassibe; Anton Nakov |
| Abstract: | Business cycles with pronounced inflation can have sectoral origins and often feature a growing share of price-adjusting firms. Rationalizing such phenomena re- quires 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. |
| Keywords: | large shocks, menu costs, networks, non-linear business cycles |
| JEL: | E31 E32 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1525 |
| By: | Filippo De Feo (Institut für Mathematik, Technische Universität Berlin); Giorgio Fabbri (Université Grenoble Alpes; INRAE); Silvia Faggian (Ca’ Foscari University of Venice); Giuseppe Freni (Parthenope University of Naples) |
| Abstract: | We study optimal and strategic extraction of a renewable resource that is distributed over a network, migrates mass-conservingly across nodes, and evolves under nonlinear (concave) growth. A subset of nodes hosts extractors while the remaining nodes serve as reserves. We analyze a centralized planner and a noncooperative game with stationary Markov strategies. The migration operator transports shadow values along the network so that Perron–Frobenius geometry governs long-run spatial allocations, while nonlinear growth couples aggregate biomass with its spatial distribution and bounds global dynamics. For three canonical growth families, logistic, power, and log-type saturating laws, under related unilities, we derive closed-form value functions and feedback rules for the planner and construct a symmetric Markov equilibrium on strongly connected networks. To our knowledge, this is the first paper to obtain explicit policies for spatial resource extraction with nonlinear growth and, a fortiori, closed-form Markov equilibria, on general networks. |
| Keywords: | Harvesting, spatial models, differential games, nature reserves |
| JEL: | Q20 Q28 R11 C73 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2025:22 |
| By: | Max Stick; Christoph Schimmele; Maciej Karpinski; Amélie Arsenault |
| Abstract: | This study used data from the 2020 General Social Survey to examine the social connectedness of immigrant women to Canadian society. The size and composition of immigrant women’s personal networks varied by their sociodemographic, immigrant-specific and residential characteristics, and by population group. Most subgroups of immigrant women had smaller social networks than their Canadian-born counterparts, although for some, the difference was small. Most of the differences between immigrants and Canadian-born women were related to weak ties, and for most subgroups there were no or fewer differences in the number of strong ties that composed their networks. Most subgroups of immigrant women had more inter-ethnic friends than Canadian-born women, even though their networks were mostly homogenous in ethnic composition. |
| Keywords: | Immigrant women, social networks, social capital, immigrant integration |
| JEL: | J23 M21 |
| Date: | 2024–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202400400005e |
| By: | Hideo Konishi (Department of Economics, Boston College); Michel Le Breton (Toulouse School of Economics, Toulouse Capitole University); Shlomo Weber (Southern Methodist University) |
| Abstract: | In this paper, we define additive dyadic social interactions games (ADG), in which each player cares not only about the selected action, but also about interactions with other players, especially those who choose the same action. This class of games includes alliance formation games, network games, and discrete choice problems with network externalities. While it is known that games in the ADG class admit a pure strategy Nash equilibrium that is a maximizer of the game's potential, the potential approach does not always apply if all coalitional deviations are allowed. We then introduce a novel notion of a strong landscape equilibrium, which relies on a limited scope of coalitional deviations. We show the existence of a strong landscape equilibrium for a class of basic additive dyadic social interactions games (BADG), even though a strong Nash equilibrium may fail to exist. Somewhat surprisingly, a potential-maximizing strong landscape equilibrium is not always a strong Nash equilibrium even if the set of the latter is nonempty. We also provide applications and extensions of our results. |
| Keywords: | Social Interactions Game, Potential Function, Coalition Formation, Strong Nash Equilibrium, Strong Landscape Equilibrium |
| JEL: | C71 C72 C78 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:kyo:wpaper:1120 |