IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0302012.html
   My bibliography  Save this article

Production networks and resilience: How dense production networks shield economies in financial crisis

Author

Listed:
  • Petre Caraiani
  • Alina Mihaela Dima
  • Cristian Păun
  • Tănase Stamule
  • Madalina Vanesa Vargas

Abstract

The research delves into the underexplored area of how production network structures influence the severity of economic downturns, particularly during the last financial crisis. Utilizing the RSTAN database from the OECD, we meticulously derived critical measures from the input-output matrices for 61 economies. Our methodology entailed a panel analysis spanning from 2008 to 2010, which is a period marked by significant recessionary pressures. This analysis aimed to correlate economic performance with various production network metrics, taking into account control factors such as interest rates and the prevalence of service sectors. The findings reveal a noteworthy positive correlation between the density of production networks and economic resilience during the crisis, which remained consistent across multiple model specifications. Conversely, as anticipated, higher interest rates were linked to poorer economic performance, highlighting the critical interplay between monetary policy and economic outcomes during periods of financial instability. Given these insights, we propose a policy recommendation emphasizing the strategic enhancement of production network density as a potential buffer against economic downturns. This approach suggests that policymakers should consider the structural aspects of production networks in designing economic stability and growth strategies, thus potentially mitigating the impacts of future financial crises.

Suggested Citation

  • Petre Caraiani & Alina Mihaela Dima & Cristian Păun & Tănase Stamule & Madalina Vanesa Vargas, 2024. "Production networks and resilience: How dense production networks shield economies in financial crisis," PLOS ONE, Public Library of Science, vol. 19(4), pages 1-14, April.
  • Handle: RePEc:plo:pone00:0302012
    DOI: 10.1371/journal.pone.0302012
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0302012
    Download Restriction: no

    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0302012&type=printable
    Download Restriction: no

    File URL: https://libkey.io/10.1371/journal.pone.0302012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0302012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.