Production and Financial Networks in Interplay
25 April 2023 3:00 pm CEST
Kenan Huremovic, IMT School for Advanced Studies
In cooperation with:
Venue
This is an online event via Zoom. Please register using the link below.
Description
This presentation is based on a paper co-authored with G. Jiménez, E. Moral-Benito, J-L. Peydró, F. Vega-Redondo.
Abstract:
We show that bank shocks originating in the financial sector propagate upstream and downstream along the production network. Our identification relies on the universe of both supplier-customer transactions and bank loans in Spain, a standard operationalization of credit-supply shocks during the 2008–09 global crisis, and the proposed theoretical framework. The impact on real effects is strong, and similarly so, when considering: (i) direct bank shocks to firms versus first-order interfirm contagion; (ii) first-order versus higher-order network effects; (iii) downstream versus upstream propagation; (iv) firm-specific versus economy-wide shocks. We develop a general equilibrium model to rationalize our findings. We estimate structural parameters of the model and verify that several testable predictions of the model hold in the data.
The presentation if available, will be posted after the event.
Registration link for online participation:
https://us06web.zoom.us/webinar/register/WN_wP88_u_zRwuyxhxpgMgojQ
Kenan Huremovic
Kenan Huremovic is Assistant Professor at the IMT School for Advanced Studies, Lucca, Italy. Before joining IMT, he was a Postdoctoral Fellow at the Aix-Marseille School of Economics. He received his PhD from the European University Institute. His research interests include theoretical and empirical analysis of games on networks, production networks, propagation of shocks and systemic risk, and networks in the labor market. He teaches graduate level Microeconomic theory.
Related literature:
- Barrot, J. N., & Sauvagnat, J. (2016). Input specificity and the propagation of idiosyncratic shocks in production networks. The Quarterly Journal of Economics, 131(3), 1543-1592.
- Bigio, S., & La’o, J. (2020). Distortions in production networks. The Quarterly Journal of Economics, 135(4), 2187-2253.
- Costello, A. M. (2020). Credit market disruptions and liquidity spillover effects in the supply chain. Journal of Political Economy, 128(9), 3434-3468.
- Carvalho, V. M., Nirei, M., Saito, Y. U., & Tahbaz-Salehi, A. (2021). Supply chain disruptions: Evidence from the great east japan earthquake. The Quarterly Journal of Economics, 136(2), 1255-1321
Keywords: supply chains; shock propagation; credit supply; real effects of finance
JEL classification: D85; E44; E51; G01; G21