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Random digraphs with given expected degree sequences: A model for economic networks

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  • Bargigli, Leonardo
  • Gallegati, Mauro

Abstract

Abstract Building upon the growing interest for complex network theory, the main ambition of this paper is to contribute to a more effective application of network theory to economic phenomena, and particularly to financial networks. We depart from recent contributions on credit networks in two respects. In the first place, we constrain diversification with the out- and in-degree distribution of nodes, by adopting a suitable extension of the expected degree model for random weighted digraphs. In the second place, we focus on real networks by using this extension as null model for statistical analysis. With the help of statistical inference, we provide a rigorous answer to the following question: do real networks obey our null model? Further, we show that this answer is tightly connected to the existence of clusters or modules, as defined by Newman and Girvan (2004), within networks.

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  • Bargigli, Leonardo & Gallegati, Mauro, 2011. "Random digraphs with given expected degree sequences: A model for economic networks," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 396-411, May.
  • Handle: RePEc:eee:jeborg:v:78:y:2011:i:3:p:396-411
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    References listed on IDEAS

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    1. repec:spr:jeicoo:v:12:y:2017:i:1:d:10.1007_s11403-015-0149-5 is not listed on IDEAS
    2. Bargigli, Leonardo & Gallegati, Mauro, 2013. "Finding communities in credit networks," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-39.
    3. Leonardo Bargigli, 2013. "Statistical Equilibrium Models for Sparse Economic Networks," Working Papers - Economics wp2013_25.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. Catullo, Ermanno & Gallegati, Mauro & Palestrini, Antonio, 2015. "Towards a credit network based early warning indicator for crises," Journal of Economic Dynamics and Control, Elsevier, vol. 50(C), pages 78-97.
    5. Leonardo Bargigli & Giovanni di Iasio & Luigi Infante & Fabrizio Lillo & Federico Pierobon, 2015. "Interbank markets and multiplex networks: centrality measures and statistical null models," Papers 1501.05751, arXiv.org.
    6. L. Bargigli & G. di Iasio & L. Infante & F. Lillo & F. Pierobon, 2015. "The multiplex structure of interbank networks," Quantitative Finance, Taylor & Francis Journals, vol. 15(4), pages 673-691, April.
    7. Giorgio Fagiolo & Tiziano Squartini & Diego Garlaschelli, 2013. "Null models of economic networks: the case of the world trade web," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 75-107, April.
    8. Bargigli, Leonardo & Gallegati, Mauro & Riccetti, Luca & Russo, Alberto, 2014. "Network analysis and calibration of the “leveraged network-based financial accelerator”," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 109-125.

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