Econometric analysis of production networks with dominant units

Mohammad Pesaran and Cynthia Fan Yang

Journal of Econometrics, 2020, vol. 219, issue 2, 507-541

Abstract: This paper introduces the notions of strongly and weakly dominant units for networks, and shows that pervasiveness of shocks to a network is measured by the degree of dominance of its most pervasive unit; shown to be equivalent to the inverse of the shape parameter of the power law fitted to the network outdegrees. New cross-section and panel extremum estimators of the degree of dominance in networks are proposed, and their asymptotic properties investigated. The small sample properties of the proposed estimators are examined by Monte Carlo experiments, and their use is illustrated by an empirical application to US input–output tables.

Keywords: Aggregate fluctuations; Strongly and weakly dominant units; Spatial models; Outdegrees; Degree of pervasiveness; Extremum estimator; Power law; Input–output tables; US economy (search for similar items in EconPapers)
JEL-codes: C12 C13 C23 C67 E32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Working Paper: Econometric Analysis of Production Networks with Dominant Units (2016)
Working Paper: Econometric Analysis of Production Networks with Dominant Units (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:219:y:2020:i:2:p:507-541

DOI: 10.1016/j.jeconom.2020.03.014

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