The Network Origins of Aggregate Fluctuations

This paper argues that in the presence of intersectoral input-output linkages, microeconomic idiosyncratic shocks may lead to aggregate fluctuations. In particular, it shows that, as the economy becomes more disaggregated, the rate at which aggregate volatility decays is determined by the structure of the network capturing such linkages. Our main results provide a characterization of this relationship in terms of the importance of different sectors as suppliers to their immediate customers as well as their role as indirect suppliers to chains of downstream sectors. Such higher-order interconnections capture the possibility of “cascade effects” whereby productivity shocks to a sector propagate not only to its immediate downstream customers, but also indirectly to the rest of the economy. Our results highlight that sizable aggregate volatility is obtained from sectoral idiosyncratic shocks only if there exists significant asymmetry in the roles that sectors play as suppliers to others, and that the “sparseness” of the input-output matrix is unrelated to the nature of aggregate fluctuations.This paper combines material from Carvalho’s Ph.D. dissertation at the University of Chicago (Carvalho, 2008) and Acemoglu, Ozdaglar, and Tahbaz-Salehi (2010). We thank the editor, Stephen Morris, and four anonymous referees for very helpful remarks and suggestions. We thank Stefana Stantcheva for excellent research assistance and Bill Kerr and Kaushik Ghosh for initial help with the NBER manufacturing productivity database. Carvalho thanks his advisor Lars Hansen and other members of his thesis committee, Robert Lucas and Timothy Conley. We are also grateful to John Fernald, Xavier Gabaix, Ali Jadbabaie, Alp Simsek, Hugo Sonnenschein, Jean Tirole, Jaume Ventura and numerous seminar and conference participants for useful feedback and suggestions. Carvalho acknowledges financial support from the Government of Catalonia (grant 2009SGR1157), the Spanish Ministry of Education and Science (grants Juan de la Cierva, JCI2009-04127, ECO2008-01665 and CSD2006-00016) and Barcelona GSE Research Network. Acemoglu, Ozdaglar and Tahbaz-Salehi acknowledge financial support from the Toulouse Network of Information Technology, National Science Foundation (Grant 0735956) and the Air Force Office of Scientific Research (Grant FA9550-09-1-0420)

Warfare, Fiscal Capacity, and Performance

We exploit differences in casualties sustained in pre-modern wars to estimate the impact of fiscal capacity on economic performance. In the past, states fought different amounts of external conflicts, of various lengths and magnitudes. To raise the revenues to wage wars, states made fiscal innovations, which persisted and helped to shape current fiscal institutions. Economic historians claim that greater fiscal capacity was the key long-run institutional change brought about by historical conflicts. Using casualties sustained in pre-modern wars to instrument for current fiscal institutions, we estimate substantial impacts of fiscal capacity on GDP per worker. The results are robust to a broad range of specifications, controls, and sub-samples

The frequency and characteristics of idiopathic osteosclerosis and condensing osteitis lesions in a Turkish patient population

Objectives: The objective of this study was to investigate the frequencies of idiopathic osteosclerosis (IO) and condensing osteitis (CO) in a Turkish patient population with respect to age and sex, in addition to shape, localization, and the dental relationship of IO and CO lesions. Patients and methods: A retrospective study was performed using panoramic radiographs of 6,154 patients ranging in age from 5 to 69 subjected to dental treatment. Descriptive characteristics of radiopacities, including shape, localization, and dental relationship were recorded. The Chi-squared test was used. Results: There were 238 radiopacities detected, 185 IO lesions in 150 (2.44 %) subjects (96 female, 54 male and mean age: 26.2), and 53 CO lesions in 50 (0.81 %) subjects (27 female, 23 male and mean age: 32.8). Both IO and CO lesions were found to be higher in number among females when compared to males. However, this difference was statistically significant only for IO lesions (p<0.001). The frequency of IO lesions was found to be significantly higher in the 3rd and 4th decades of life (20-39 years) than in other decades (p<0.001). On the other hand, the frequency of CO lesions was the similar in the age ranges of 20-39 years and 40-69 years, and its frequency in these periods was statistically higher than in the 1st and 2nd decades of life (p<0.01). Conclusion: Our results point to the low IO and CO frequency among the Turkish population. In addition, our findings support the theory that IO lesions are developmental variations of normal bone architecture unrelated to a local stimulant and CO lesions could be considered reactive formations related to teeth with severe caries, restoration, or pulpitis

A Dynamic Theory of Resource Wars

We develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented. Our focus is on the interaction between the scarcity of resources and the incentives for war in the presence of limited commitment. We show that a key parameter determining the incentives for war is the elasticity of demand. Our first result identifies a novel externality that can precipitate war: price-taking firms fail to internalize the impact of their extraction on military action. In the case of inelastic resource demand, war incentives increase over time and war may become inevitable. Our second result shows that in some situations, regulation of prices and quantities by the resource-rich country can prevent war, and when this is the case, there will also be slower resource extraction than the Hotelling benchmark (with inelastic demand). Our third result is that because of limited commitment and its implications for armament incentives, regulation of prices and quantities might actually precipitate war even in some circumstances where wars would not have arisen under competitive markets

Systemic risk and macroeconomic fat tails

We propose a mechanism for shock amplification that potentially can account for fat tails in the distribution of the growth rate of national output. We argue that extreme macroeconomic events, such as the Great Depression and the Great Recession, were preceded by significant turmoil in the banking system. We have developed a model of bank network formation and presented numerical simulations that show that, for the benchmark case, aggregate credit follows a random walk. When we introduce fire sales the model does not only produce larger variations in the growth of aggregate credit but also shows that there is an asymmetry between booms and busts that is also consistent with empirical evidence

A curious case of property privatization: two examples of the tragedy of the anticommons in Ho Chi Minh City-Vietnam

Contains fulltext : 166089pub.pdf (publisher's version ) (Open Access)This paper focuses on the influence of land and property privatization processes on urban development in Ho Chi Minh City (HCMC), Vietnam. Many scholars have recognized that the privatization policy regarding property and land use rights may create a fragmentation of private land ownership, which eventually can lead to what has been called the tragedy of the anticommons. This paper observes how this phenomenon has also threatened urban development in HCMC after the introduction of the Doi Moi policy. Two case studies show two different types of development processes in HCMC, namely a small self-development project and a large-scale commercial project. Both case studies reveal how (potential) tragedies of the anticommons can be solved in different ways.09 augustus 201

Introduction

This collected volume gives a concise account of the most relevant scientific results of the COST Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", a four-year project supported by COST (European Cooperation in Science and Technology). It is divided into three parts reflecting the different perspectives under which complex spatial economic systems have been studied: (i) the Macro perspective looks at the interactions among international or regional trading partners; (ii) the Meso perspective considers the functioning of (financial, labour) markets as social network structures; and, finally, (iii) the Micro perspective focuses on the strategic choices of single firms and households. This Volume points also at open issues to be addressed in future research

Varieties of Limited Access Orders: The nexus between politics and economics in hybrid regimes

This article advances our understanding of differences in hybrid stability by going beyond existing regime typologies that separate the study of political institutions from the study of economic institutions. It combines the work of Douglass North, John Wallis, and Barry Weingast (NWW) on varieties of social orders with the literature on political and economic regime typologies and dynamics to understand hybrid regimes as Limited Access Orders (LAOs) that differ in the way dominant elites limit access to political and economic resources. Based on a measurement of political and economic access applied to seven post‐Soviet states, the article identifies four types of LAOs. Challenging NWW's claim, it shows that hybrid regimes can combine different degrees of political and economic access to sustain stability. Our typology allows to form theoretical expectations about the kinds of political and/or economic changes that will move different types of LAOs toward more openness or closure

On the new economic philosophy of crisis management in the European Union

This essay attempts to go beyond presenting the bits and pieces of still ongoing crisis management in the EU. Instead it attempts at finding the ‘red thread’ behind a series of politically improvised decisions. Our fundamental research question asks whether basic economic lessons learned in the 1970s are still valid. Namely, that a crises emanating from either structural or regulatory weaknesses cannot and should not be remedied by demand management. Our second research question is the following: Can lacking internal commitment and conviction in any member state be replaced or substituted by external pressure or formalized procedures and sanctions? Under those angles we analyze the project on establishing a fiscal and banking union in the EU, as approved by the Council in December 2012