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on Network Economics |
| By: | Yann Bramoull\'e; Sebastiaan Maes |
| Abstract: | In many practical applications, only noisy proxies for the true regressors are available, which is commonly believed to induce an attenuation bias. In the linear-in-means model, however, estimated peer effects might be inflated, potentially leading to false positives. This paper shows that the asymptotic bias depends on the interplay between individual characteristics and network links and demonstrates how the network structure can facilitate identification without the need for additional external information. Based on these identification results, we present consistent GMM and 2SLS estimators that are easily implementable. Our results are illustrated by means of a Monte Carlo simulation. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.00336 |
| By: | Olga Rospuskova; Omer Tamuz; Jake Zhang |
| Abstract: | We study global games in which agents coordinate locally, with their social network neighbors, contingent on a favorable state. Before acting, agents learn the private signals of all agents within network distance $r$. As $r$ grows, every agent learns the state, but efficient coordination depends on higher-order beliefs, which are shaped by the geometry of the network. We introduce network common learning, a network analogue of common learning, and show that it is attained when neighboring agents' observations differ by many signals, as on the two-dimensional grid, but fails on networks with informational bottlenecks, such as the line, where only the safe action survives in equilibrium. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.28821 |
| By: | Fetzer, Thiemo; Lambert, Peter John |
| Abstract: | Policy debates on ‘critical minerals’ have multiplied faster than our empirical tools for identifying which products are system-critical. Most existing lists are expert-driven and static; they say little about how upstream raw materials and downstream technologies are knit together in global production networks, or about the asymmetric roles of large demand and supply hubs. This paper proposes a network index of criticality (NIC), built from trade data and a directed production network, that integrates (i) a product’s share in world trade, (ii) exporter and importer concentration, and (iii) its position in a product-input network. Criticality here refers to systemic exposure encoded in tradeable production networks; it is not a welfare metric and it is not a measure of physical scarcity. We show that NIC aligns with revealed policy attention in official critical-mineral lists. We then construct three families of counterfactuals that remove China, the United States, or the European Union from trade on either the export (supply) or import (demand) side. These scenarios yield product-level diagnostics of hub dependence and map directly to policy instrument choice (e.g. recycling standards, permitting and processing investment, strategic reserves, or trusted-partner agreements). |
| Keywords: | climate action;critical minerals;industrial policy;production networks;supply chain resilience;trade concentration |
| JEL: | F10 F40 F50 O30 L60 Q40 Q50 |
| Date: | 2026–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140668 |
| By: | Jorjin F. Godoy (Bangko Sentral ng Pilipinas) |
| Abstract: | This study explores the interconnectedness of the Philippine banking system, focusing on how 481 banks supervised by the Bangko Sentral ng Pilipinas (BSP) are linked through credit, liquidity, and payment channels. Using interbank network data, it introduces two metrics—the Overall Interconnectedness Index (OII) and the Strong Connected Component Index (SCCI)—to measure these connections. The findings suggest that in a 481-nodes network, interbank payments channel shows stronger ties than loans or deposits, but overall interconnectedness is low (0.06 – 0.65 percent). For universal and commercial banks, interconnectedness rises to 2.64 – 6.55 percent yet remains sparse compared to a fully connected network (100 percent). While low interconnectedness may reduce contagion risk from small shocks, it may also limit risk-sharing capacity and lessens the system's ability to absorb larger shocks effectively. |
| JEL: | G21 D85 C10 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bhd:dpaper:202507 |
| By: | Paul Gompers; George Hu; Will Levinson; Sachin Srivastava |
| Abstract: | This paper examines how networks formed through college athletics influence the early-career trajectories of Ivy League graduates. Tracking professional histories of 120, 306 Ivy League graduates, we compare each graduate's actual first job against other potential jobs that the graduate could reasonably have taken. Athletics-based networks, especially team-based connections, materially influence initial job choice. Employing one additional alum from a specific Ivy League collegiate sports team increases the probability that a same-team athlete joins the firm by 193.70% relative to the baseline match probability. Likewise, employing one more Ivy League alum who played a specific Varsity sport increases the probability that any Ivy League athlete who plays the same sport joins the firm by 16.40%, while employing one more alum who played any sport at a specific Ivy League university raises the probability that any Ivy League athlete from the same university joins the firm by 4.60%. For team-based connections, these effects persist whether the alum and the college athlete were direct peers whose college years overlapped or older “network” affiliates whose college years were completely disjoint. Our results demonstrate that college athletics-based social networks materially influence initial job placement and early-career trajectories for top college graduates. More generally, they clarify how non-academic social capital shapes the job searching and matching process within labor markets. |
| JEL: | I23 J24 J38 J4 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35527 |
| By: | Zequn Jin; Gaoqian Xu; Zixin Yang; Zhengyu Zhang |
| Abstract: | This paper studies quantile treatment and spillover effects in network experiments. Average spillover effects reveal how treating a unit's neighbors affects its outcome on average, but mask the heterogeneity of these effects across the outcome distribution. We define structural quantile effects that compare outcome quantiles between exposure states, characterizing how own treatment and exposure to treated neighbors affect different parts of the outcome distribution. Building on \citet{leung2020treatment}, we first establish the weak convergence of the estimated quantile-effect process under conditions requiring the stabilization of the degree distribution and the network-dependent covariance structure. Our main contribution is to propose uniform confidence bands (UCBs) based on Gaussian approximations conditional on the realized network, avoiding these stabilization requirements. The proposed method is evaluated through extensive simulation studies and an empirical application to a randomized savings-account experiment in Nepal \citep{prina2015banking}. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.22286 |
| By: | Georgios Papadopoulos; Javier Ojea Ferreiro; Roberto Panzica |
| Abstract: | This study investigates how extreme flood events can indirectly impact the global supply chain through production disruptions. Using a data-driven, agent-based network model that combines company-level data with flood hazard maps, the research simulates the transmission and amplification of shocks. The findings emphasize that the size of inventories is crucial; a lean-inventory system leads to faster shock propagation, higher losses, and fewer recoveries compared to an abundant-inventory system. Additionally, the study identifies that the number and criticality of flooded companies' trade links, along with the magnitude of the flood, correlate with the speed and severity of contagion. Interestingly, a key metric -the average criticality of affected firms' outgoing links- consistently peaks before the shock's propagation enters a fast-paced contagion regime. This could serve as an early warning indicator, giving businesses and policymakers precious time to react. By identifying these critical vulnerabilities, this research provides a framework for enhancing the resilience of global supply chains in the face of increasing climate-related and other risks. |
| Keywords: | Models and tools; Econometric, statistical and computational methods; Structural challenges; Climate change; International trade, finance and competitiveness |
| JEL: | C C6 C60 C63 D D8 D85 Q Q5 Q54 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:26-30 |
| By: | Bustamante, Maria Cecilia; Pellegrino, Bruno |
| Abstract: | We present a new dynamic model of corporate investment in imperfectly-competitive product markets, extending the neoclassical (Q) theory of capital to a multi-firm, multi-product, fullystructural model. Our model embeds a state-of-the-art hedonic demand system, endogenizes firms' markups and generalizes Tobin's Q to a matrix (or network) of product market spillovers, which captures how each firm's investment affects that of its rivals. We provide existence and uniqueness results along with exact, global analytical solutions for the Markov Perfect Equilib-rium investment policies. We then take our model to the data for the universe of U.S. public companies and obtain five novel insights: 1) product market competition is a key force driving aggregate investment and capital allocation; 2) the persistence of firm's capital stocks increased over the past 25 years (i.e. capital became "stickier"); 3) monopoly rents account for a large, rising share of firms' value; 4) positive shocks to firms' cost of capital increase markups and con-centration; 5) mergers consummated since 1995 have led to a modest decline in aggregate capital formation; at the firm-level the resulting increases in markups are highly heterogeneous. |
| Keywords: | investment, networks, product market |
| JEL: | C7 D2 E2 G3 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:342448 |
| By: | Pengbin Feng |
| Abstract: | We study a deterministic contagion model for a large population of financial institutions connected by a weighted directed exposure matrix. The sign convention and loss term are motivated by a default cascade with partial recovery and interest servicing, whereas the dynamic model records distress through occupation time and therefore permits recovery. A rank-\(K\) factorization yields an exact reduction of the finite network to \(K\) macroscopic feedback coordinates. For bounded Lipschitz losses, the reduced dynamics form a nonautonomous \(K\)-dimensional ODE; we prove Wasserstein stability with respect to the type law and derive a transport representation for the joint state--factor distribution. On a fixed latent space, the associated directed-kernel equation is well posed and \(L^1\)-stable, and a quantitative bridge theorem separates finite-population error from kernel-approximation error. For the indicator loss, we establish fixed-rank well-posedness under threshold regularity and a Vapnik--Chervonenkis-type estimate for measurable selections of sampled solutions. At the graphon level, we prove well-posedness for factorized kernels and for piecewise-\(C^1\) kernel--profile pairs satisfying uniform transversality, together with a perturbation theorem for uniformly transverse approximation families. A sovereign-overlap illustration based on the 2025 EBA transparency exercise computes factor loadings and a priori sensitivity bounds from public disclosures; resampling errors on the empirical 117-bank population are consistent with the predicted \(N^{-1/2}\) scale. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.04529 |
| By: | Huneeus, Federico; Del Valle Fuentes, Miguel Angel |
| Abstract: | To understand the geographic and sectoral impact of productivity, we build the first input-output matrix disaggregated at the geographic level within a country using unique administrative data harmonized to match national accounts. We use this data from Chile to calibrate a state-of-the-art general equilibrium quantitative trade model with production networks, labor mobility, firm selection, international and domestic trade, congestion of fixed factors, and knowledge diffusion. We consider two applications. First, we study the aggregate effects of local productivity shocks. We show that location-sector interactions are crucial: locations and sectors separately account for less than half of the dispersion in GDP elasticities from location-sector- specific productivity shocks. Geography-specific input-output linkages explain 16% of the dispersion, due to the role played by small and influential markets. Second, we analyze the exit of a large steel plant. We show that geographically disaggregated production linkages substantially increase the propagation of the plant exit. |
| Keywords: | Spatial economics;Geographic distribution;Input-output linkages;Trade |
| JEL: | F11 F17 R15 D57 E01 R12 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14713 |
| By: | Josh Kirk; Evgenia Passari; Hélène Rey |
| Abstract: | Trade networks underpinning the energy transition are endogenous economic objects, and their structure is a source of market power. Using bilateral trade data for thirteen electrification metals over 1995–2023, we show that trade in these materials has reorganised into a hub-and-spoke system centred on China, in sharp contrast to the diffuse, multilateral structure of fossil fuels. This centrality did not follow from resource endowments: China holds few of the underlying reserves. It was built through processing investment, industrial policy, and commodity-targeted development finance—an equilibrium outcome rather than a geographical accident. We formalise this in a stylised model in which a country chooses how central to become, and show that centrality maps into pricing power: the world price response to a strategic supply cut is stronger when the network is more concentrated and downstream demand and fringe supply are more inelastic. Constructing text-based, commodity-specific supply shocks and estimating local projections, we find that supply contractions in critical metals raise US and EU consumer prices by roughly twice as much as comparable fossil-fuel shocks, and more persistently. Centrality is therefore not merely descriptive: it creates leverage over global prices. The green transition reduces strategic dependence on hydrocarbon exporters but reconstitutes it around mineral supply chains. |
| JEL: | F49 F50 F60 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35497 |