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Credit Chains and Bankruptcy Propagation in Production Networks by Stefano Battiston; Domenico Delli Gatti; Mauro Gallegati; Bruce Greenwald; Joseph E. Stiglitz is a Economics, Econometrics and Finance article available to read on EtoBox.

What is Credit Chains and Bankruptcy Propagation in Production Networks about?

We present a simple model of a production network in which firms are linked by supplier-customer relationships involving extension of trade-credit. Our aim is to identify the minimal set of mechanisms which reproduce qualitatively the main stylized facts of industrial demography, such as firms' size distribution, and, at the same time, the correlation, over time and across firms, of output, growth and bankruptcies. The behavior of aggregate variables can be traced back to the direct firm-firm interdependence. In this paper, we assume that the number of firms is constant and the network has a periodic static structure. But the framework allows further extensions to investigate which network structures are more robust against domino effects and, if the network is let to evolve in time, which structures emerge spontaneously, depending on the individual strategies for orders and delivery.

Who reads Credit Chains and Bankruptcy Propagation in Production Networks?

Author

Stefano Battiston; Domenico Delli Gatti; Mauro Gallegati; Bruce Greenwald; Joseph E. Stiglitz

Publisher

Elsevier Science; Elsevier ; Elsevier BV (ISSN 0165-1889)

Published

2007

Language

EN

Field

Economics, Econometrics and Finance (Social Sciences)