Metastable Features of Economic Networks and Responses to Exogenous Shocks

Ali Hosseiny, Mohammad Bahrami, Antonio Palestrini () and Mauro Gallegati

PLOS ONE, 2016, vol. 11, issue 10, 1-22

Abstract: It is well known that a network structure plays an important role in addressing a collective behavior. In this paper we study a network of firms and corporations for addressing metastable features in an Ising based model. In our model we observe that if in a recession the government imposes a demand shock to stimulate the network, metastable features shape its response. Actually we find that there exists a minimum bound where any demand shock with a size below it is unable to trigger the market out of recession. We then investigate the impact of network characteristics on this minimum bound. We surprisingly observe that in a Watts-Strogatz network, although the minimum bound depends on the average of the degrees, when translated into the language of economics, such a bound is independent of the average degrees. This bound is about 0.44ΔGDP, where ΔGDP is the gap of GDP between recession and expansion. We examine our suggestions for the cases of the United States and the European Union in the recent recession, and compare them with the imposed stimulations. While the stimulation in the US has been above our threshold, in the EU it has been far below our threshold. Beside providing a minimum bound for a successful stimulation, our study on the metastable features suggests that in the time of crisis there is a “golden time passage” in which the minimum bound for successful stimulation can be much lower. Hence, our study strongly suggests stimulations to arise within this time passage.

Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0160363 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 60363&type=printable (application/pdf)

Related works:
Working Paper: Metastable Features of Economic Networks and Responses to Exogenous Shocks (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0160363

DOI: 10.1371/journal.pone.0160363

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone ().