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International Trade and Financial Integration : a Weighted Network Analysis

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  • Giorgio Fagiolo

    (Laboratory of Economics and Management (LEM))

  • Javier Reyes

    (Department of Economics (AR))

  • Stefano Schiavo

    (OFCE)

Abstract

In this paper we compare the degree and patterns of trade and financial integration exploiting network analysis. We start from a simple binary analysis and then move to a more appropriate weighted approach, presenting a detailed overview of international goods and financial markets integration, and compare their main characteristics. Moving from binary to weighted analysis changes considerably the properties of the networks, and with them the picture of the integration process. Limiting to a binary approach can thus lead to a misrepresentation of the underlying economic phenomena. We find that the trade network is almost fully connected while international financial integration is less pervasive. Also, regional links continue to play a relevant role.

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Paper provided by Sciences Po in its series Sciences Po publications with number 2007-11.

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Date of creation: Mar 2007
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Handle: RePEc:spo:wpmain:info:hdl:2441/6122

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  1. Lawrence G. Goldberg & James R. Lothian & John Okunev, 1997. "Has International Financial Integration Increased?," New York University, Leonard N. Stern School Finance Department Working Paper Seires, New York University, Leonard N. Stern School of Business- 98-040, New York University, Leonard N. Stern School of Business-.
  2. Garlaschelli, Diego & Loffredo, Maria I., 2005. "Structure and evolution of the world trade network," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 355(1), pages 138-144.
  3. D. Garlaschelli & M. I. Loffredo, 2005. "Structure and Evolution of the World Trade Network," Papers physics/0502066, arXiv.org, revised May 2005.
  4. Richard Portes & Helene Rey, 1999. "The Determinants of Cross-Border Equity Flows," NBER Working Papers 7336, National Bureau of Economic Research, Inc.
  5. Raja Kali & Javier Reyes, 2007. "The architecture of globalization: a network approach to international economic integration," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 595-620, July.
  6. repec:ebl:ecbull:v:3:y:2006:i:34:p:1-12 is not listed on IDEAS
  7. D. Garlaschelli & M. I. Loffredo, 2004. "Fitness-dependent topological properties of the World Trade Web," Papers cond-mat/0403051, arXiv.org, revised Oct 2004.
  8. Bekaert, Geert & Harvey, Campbell R., 2003. "Emerging markets finance," Journal of Empirical Finance, Elsevier, Elsevier, vol. 10(1-2), pages 3-56, February.
  9. Li, Xiang & Ying Jin, Yu & Chen, Guanrong, 2003. "Complexity and synchronization of the World trade Web," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 328(1), pages 287-296.
  10. Raja Kali & Javier Reyes, 2010. "Financial Contagion On The International Trade Network," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 48(4), pages 1072-1101, October.
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Citations

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Cited by:
  1. Matteo Chinazzi & Giorgio Fagiolo & Javier A. Reyes & Stefano Schiavo, 2012. "Post-Mortem Examination of the International Financial Network," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2012/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  2. Shamnaaz B. Sufrauj, 2012. "The implications of the elimination of the multi-fibre arrangement for small remote island economies: A network analysis," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 1201, Department of Economics, University of Trento, Italia.
  3. Julian Caballero, 2012. "Banking Crises and Financial Integration," Research Department Publications, Inter-American Development Bank, Research Department 4816, Inter-American Development Bank, Research Department.
  4. Arribas Ivan & Perez Francisco & Tortosa-Ausina Emili, 2010. "The Determinants of International Financial Integration Revisited: The Role of Networks and Geographic Neutrality," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, De Gruyter, vol. 15(1), pages 1-55, December.
  5. Luca De Benedictis & Lucia Tajoli, 2009. "The World Trade Network," Working Papers, Macerata University, Department of Finance and Economic Sciences 51-2009, Macerata University, Department of Finance and Economic Sciences, revised Mar 2009.
  6. Jos Jansen & Ad Stokman, 2011. "International Business Cycle Comovement: Trade and Foreign Direct Investment," DNB Working Papers, Netherlands Central Bank, Research Department 319, Netherlands Central Bank, Research Department.
  7. Samuel MAVEYRAUD, 2013. "La structure du réseau de commerce international en 1850," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2013-22, Groupe de Recherche en Economie Théorique et Appliquée.
  8. Massimo Riccaboni & Stefano Schiavo, 2012. "Stochastic Trade Networks," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c017_014, DEGIT, Dynamics, Economic Growth, and International Trade.
  9. Jiang, Zhi-Qiang & Zhou, Wei-Xing, 2010. "Complex stock trading network among investors," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 389(21), pages 4929-4941.
  10. Chang, Chia-ling & Chen, Shu-heng, 2011. "Interactions in DSGE models: The Boltzmann-Gibbs machine and social networks approach," Economics Discussion Papers, Kiel Institute for the World Economy 2011-25, Kiel Institute for the World Economy.
  11. Garratt, Rodney & Mahadeva, Lavan & Svirydzenka, Katsiaryna, 2011. "Mapping systemic risk in the international banking network," Bank of England working papers, Bank of England 413, Bank of England.
  12. Mario Maggioni & Teodora Uberti, 2011. "Networks and geography in the economics of knowledge flows," Quality & Quantity: International Journal of Methodology, Springer, Springer, vol. 45(5), pages 1031-1051, August.
  13. Chen, Shu-heng & Chang, Chia-ling, 2012. "Interactions in the New Keynesian DSGE models: The Boltzmann-Gibbs machine and social networks approach," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, Kiel Institute for the World Economy, vol. 6(26), pages 1-32.
  14. Garratt, Rodney & Mahadeva, Lavan & Svirydzenka, Katsiaryna, 2011. "The contagious capacity of the international banking network: 1985-2009," University of California at Santa Barbara, Economics Working Paper Series qt0r89f16p, Department of Economics, UC Santa Barbara.

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