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Reconstructing firm-level interactions: the Dutch input-output network

16 December 2021
12:00 pm
San Francesco Complex - classroom 2

Recent crises have shown that the knowledge of the structure of input-output networks at the firm level is crucial when studying economic resilience from the microscopic point of view of firms that rewire their connections under supply and demand shocks. Unfortunately, empirical inter-firm network data are rarely accessible and protected by confidentiality. The available methods of network reconstruction from partial information, which have been devised for financial exposures, are inadequate for inter-firm relationships because they treat all pairs of nodes as potentially interacting, thereby overestimating the rewiring capabilities of the system. In this talk I will present our recent work using two big data sets of transactions in the Netherlands to represent a large portion of the Dutch inter-firm network and document the properties of one of the few analysed networks of this kind. I will discuss a generalised maximum-entropy reconstruction method that preserves the production function of each firm in the data, i.e. the input and output flows of each node for each product type. I will also present some of the ongoing work related to the rewiring capability of the system and its relation with the economy’s resilience to shocks.

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Leonardo Niccolò Ialongo - Scuola Normale Superiore