Sadamori Koujaku, Daisuke Miyakawa, 16 November 2017

Venture capital firms use a variety of accumulated resources to inform their investment activities, but do the rely solely on their own resources or do they employ other firms’ resources to complement their own? This column examines the pattern of co-investments among venture capital firms and discusses the economic implications. Past experience of co-investments increases the likelihood of future co-investments among firms when the returns from these past co-investments were high, and also when the jointly invested venture business companies experienced greater growth after an IPO.

Mushfiq Mobarak, Karen Levy, Maira Reimão, 14 November 2017

Benjamin Bernard, Agostino Capponi, Joseph Stiglitz, 18 October 2017

Worried about the cost of public bailouts, governments have proposed bail-ins whereby banks contribute to rescuing their debtors. This column analyses the conditions under which bail-in strategies can be credibly implemented, showing that this heavily depends on the network structure. While earlier work has suggested that denser networks are socially preferred to more sparsely connected networks, the opposite holds in the presence of the government’s strategic intervention.

Michael König, Dominic Rohner, Mathias Thoenig, Fabrizio Zilibotti, 25 June 2017

Hiroyasu Inoue, Yasuyuki Todo, 25 April 2017

Natural disasters have enormous economic consequences, with the 2011 Great East Japan Earthquake providing a particularly stark recent example. This column uses supply chain data for more than one million Japanese firms to explore how negative shocks from natural disasters propagate through firm networks. Shocks are found to propagate very quickly, due in large part to certain ‘hub’ firms that have a high number of supply chain partners. Production substitution is the key to slowing the propagation.

Marco Di Maggio, Amir Kermani, Zhaogang Song, 26 November 2016

The Global Crisis of 2008 highlighted the role of intertwined financial markets in shaping the transmission of risk and the build-up of fragility throughout the system. This column investigates the role of dealer networks in the corporate bond market. Network relationships appear to act as a buffer in periods of distress, but also accentuate systemic fragility as connections with vulnerable dealers might affect trading outcomes even for sound dealers.

Toshihiro Okubo, Tetsuji Okazaki, Eiichi Tomiura, 19 July 2016

In the context of increased global trade and accompanying competition, firms are increasingly engaged in industrial clusters. This column uses firm-level transaction data to analyse the impact of firms’ relationships with financial institutions on their networking within clusters. Firms participating in government-supported cluster programmes increase their transaction networks significantly faster than those not in clusters. The column also finds that firms with expanding networks are mainly financed by regional banks, not national or global ones.

Stela Rubínová, Emmanuel Dhyne, 04 July 2016

Even in export-oriented industries, only a handful of firms ship their goods abroad. These firms are systematically different from their purely domestic counterparts. This column sheds light on the domestic supply chain of exporters to uncover firms whose production is exported indirectly. Accounting for indirect exporters brings the empirics of international trade closer to the modern structure of production, characterised by many stages in possibly many locations. These findings suggest that the distributional effects of globalisation go beyond the exporters versus non-exporters dichotomy.

Marcel Fafchamps, Julien Labonne, 31 May 2016

Politicians may have the opportunity to interfere with the allocation of public services to help to achieve their electoral objectives. This column argues that politicians share rents with central players to build and sustain coalitions. Using detailed data from the Philippines, it examines social networks and the allocation of municipal services. Households with greater potential to broker political coalitions do indeed appear to receive more services from their municipal government. 

Kris Mitchener, Gary Richardson, 28 May 2016

The Global Crisis emphasised the fragility of international financial networks. Despite this, there has been little historical research into how networks propagate financial shocks. This column explores how interbank networks transmitted liquidity shocks through the US banking system during the Great Depression. During banking panics, the pyramided-structure of reserves forced troubled banks to reduce lending, thus amplifying the decline in investment spending. 

Co-Pierre Georg, Michael E. Rose, 16 January 2016

Informal collaboration is an integral part of academia. Studies of academic collaboration have mostly focused on formal collaboration, as measured by co-authorships. This column instead constructs a network of informal collaboration in financial economics, exploiting acknowledgements of assistance appearing in published papers. Three rankings of financial economists are constructed based on acknowledgement occurrence and centrality. Being helpful is not found to predict centrality in the informal collaboration network.

Margherita Comola, Marcel Fafchamps, 08 December 2015

Dyadic social network data – describing relations between two actors – are frequently derived from self-reporting surveys. This column explores how the misreporting problems that are typical of such data can bias estimations. Data on transfers between households in a Tanzanian village are shown to display a high rate of discrepancies within dyads. Failure to account for such misreporting results in a sizeable underestimation of inter-household transfers. 

Emilie Anér, Anna Graneli, Magnus Lodefalk, 14 October 2015

A large body of research has established a positive link between immigrants and bilateral trade. However, the temporary movement of people across borders has received less attention. This column uses Swedish data to analyse the impact of temporary cross-border movement on trade. Recently arrived migrants are found to reduce the negative impact of distance on foreign trade, by assisting firms to overcome informal and informational barriers to trade with their origin country. Facilitating movement of people across borders can be a highly useful tool for engaging in and benefitting from specialised and internationalised production networks.

Elizabeth Ananat, Shihe Fu, Stephen Ross, 28 June 2015

The black-white wage gap persists. Year after year, data tell us that black workers in the US earn less than their white counterparts. This column presents new evidence focused on the notion of race-specific social networks and ‘knowledge spillovers’. Data suggest that a black worker may be less able than an otherwise similar white worker to enjoy knowledge spillovers that arise in predominantly white work environments, suppressing their earnings.

Dominick Bartelme, Yuriy Gorodnichenko, 26 June 2015

Specialisation has been extensively researched at the micro and macro levels, but the middle one has received little attention. This column argues that the middle level – linkages across firms and industries within a country – can be important in economic development. Having built a database of input-output tables for a broad spectrum of countries and times, the authors show that countries with stronger linkages have indeed higher productivity.  

Trevon Logan, John Parman, 09 March 2015

Racial disparities in socioeconomic conditions remain a major policy issue throughout the world. This column applies a new neighbour-based measure of residential segregation to US census data from 1880 and 1940. The authors find that existing measures understate the extent of segregation, and that segregation increased in rural as well as urban areas. The dramatic decline in opposite-race neighbours during the 20th century may help to explain the persistence of racial inequality in the US.

Matthew Jackson, Brian Rogers, Yves Zenou, 06 March 2015

Understanding our increasingly interconnected world requires tools from the rapidly growing field of network science. This column discusses guiding principles that are emerging from that science and helping to understand human behaviour – ranging from disease propagation and financial contagion to criminal behaviour.

Yves Zenou, 08 January 2015

Targeting key players in a network can have important effects due to multipliers arising from peer effects. This column argues that this is particularly true for crime –the success in reducing crime in Chicago was due to the targeting of 400 key players rather than spending resources on more general targets. Key-player policies in crime, education, R&D networks, financial networks, and diffusion of microfinance outperform other policies such as targeting the most active agents in a network.

Margherita Comola, Marcel Fafchamps, 04 November 2014

How should researchers investigate the true role of people’s self-reported social links in getting a job, getting a favour or simply getting information? This column introduces a framework to estimate the process by which people’s self-reported social links are formed. The authors show that different link formation rules predict the different network structures seen in data from a risk-sharing survey in a Tanzanian village and the diffusion of agricultural knowledge in the Indian state of Maharashtra.

Alfonso Rosolia, Federico Cingano, 17 July 2011

If you lose your job, can you find a new one with a little help from your friends? This column presents evidence that displaced Italian workers with more employable friends and social contacts are unemployed for a shorter period of time.

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