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Missing Links in Multiple Trade Networks

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Rachele Foschi & Massimo Riccaboni & Stefano Schiavo, 2013. "Missing Links in Multiple Trade Networks," Working Papers 5/2013, IMT Institute for Advanced Studies Lucca, revised Sep 2013.
  • Handle: RePEc:ial:wpaper:5/2013
    as

    Download full text from publisher

    File URL: http://eprints.imtlucca.it/1658/1/EIC_WP_5_2013.pdf
    File Function: First version, 2013
    Download Restriction: no

    References listed on IDEAS

    as
    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. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    3. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Guan, Qing & An, Haizhong & Gao, Xiangyun & Huang, Shupei & Li, Huajiao, 2016. "Estimating potential trade links in the international crude oil trade: A link prediction approach," Energy, Elsevier, vol. 102(C), pages 406-415.

    More about this item

    Keywords

    Multiple Networks; Trade Networks; Preferential Attachment; Missing Trade; Innovation and Trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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