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Missing Links in Multiple Trade Networks

Listed author(s):
  • Rachele Foschi

    ()

    (IMT Lucca Institute for Advanced Studies)

  • Massimo Riccaboni

    ()

    (IMT Lucca Institute for Advanced Studies)

  • Stefano Schiavo

    (School of International Studies and Department of Economics and Management, University of Trento)

In this paper we develop a network model of international trade which is able to replicate the concentrated and sparse nature of trade data. Our model extends the preferential attachment (PA) growth model to the case of multiple networks. Countries trade a variety of goods of different complexity. Every country progressively evolves from trading less sophisticated to high-tech goods. The probability to capture more trade opportunities at a given level of complexity and to start trading more complex goods are both proportional to the number of existing trade links. We provide a set of theoretical predictions and simulative results. A calibration exercise shows that our model replicates the same concentration level of world trade as well as the sparsity pattern of the trade matrix. Moreover, we find a lower bound for the share of genuine missing trade links. We also discuss a set of numerical solutions to deal with large multiple networks.

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File URL: http://eprints.imtlucca.it/1658/1/EIC_WP_5_2013.pdf
File Function: First version, 2013
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Paper provided by IMT Institute for Advanced Studies Lucca in its series Working Papers with number 5/2013.

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Length: 21 pages
Date of creation: Sep 2013
Date of revision: Sep 2013
Publication status: Published in EIC working paper series
Handle: RePEc:ial:wpaper:5/2013
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Web page: http://eprints.imtlucca.it/

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  1. Roc Armenter & Mikl?s Koren, 2014. "A Balls-and-Bins Model of Trade," American Economic Review, American Economic Association, vol. 104(7), pages 2127-2151, July.
  2. Giorgio Fagiolo & Javier Reyes & Stefano Schiavo, 2008. "The World-Trade Web: Topological Properties, Dynamics, and Evolution," LEM Papers Series 2008/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  3. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
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