The Strength of Weak Ties

The Strength of Weak Ties

Key Terms

  • Loosly Coupled Systems
  • Weak Ties
  • Strong Ties
  • Connections
  • Networks
  • Diffusion
  • Lockdown
  • Isolation
  • Quarantine
  • Separation
  • Preferences
  • Epidemiology
  • Tightly Coupled Systems
  • Slack
  • Buffer
  • Communities in Networks
  • Ties
  • Borders
  • Boundaries
  • Brokers
  • Boundary Spanners
  • Cooperation
  • Competition
  • Divisions
  • Risks
  • Contagion
  • Interconnectedness
  • Clusters

The Strength of Weak Ties is quite a relevant topic currently due to focus on

  • Diffusion of Innovation
  • Spread of Diseases
  • Global Supply Chains
  • Community Formation in Networks
  • Communication in Networks
  • Relations between Groups
  • Resilience
  • Risks and Fragility
  • Contagion and Spillovers

The Strength of Weak Ties

Mark Granovetter

The Strength of Weak Ties – Continued

My Related Posts

Boundaries and Networks

Contagion in Financial (Balance sheets) Networks

Boundaries and Relational Sociology

Boundaries and Distinctions

Boundary Spanning in Multinational and Transnational Corporations

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

Global Flow of Funds: Statistical Data Matrix across National Boundaries

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Micro Motives, Macro Behavior: Agent Based Modeling in Economics

Multiplex Financial Networks

Multilevel Approach to Research in Organizations

On Holons and Holarchy

Networks and Hierarchies

Key Sources of Research

The Strength of Weak Ties

Mark Gronovetter

The American Journal of Sociology, Vol. 78, No. 6. (May, 1973), pp. 1360-1380

Click to access granovetterTies.pdf

https://www.semanticscholar.org/paper/The-Strength-of-Weak-Ties-Granovetter/c9aece346139711b8c65c618da99cdbecb162575

THE STRENGTH IN WEAK TIES

WILLIAM T. LIU,  ROBERT W. DUFF

Public Opinion Quarterly, Volume 36, Issue 3, FALL 1972, Pages 361–366, https://doi.org/10.1086/268018

Published: 01 January 1972

https://academic.oup.com/poq/article-abstract/36/3/361/1875803

The Future of Weak Ties

Aral, Sinan. “The Future of Weak Ties.”

American Journal of Sociology 121, no. 6 (May 2016): 1931–1939.

MIT

Attention on Weak Ties in Social and Communication Networks

Lilian Weng, Ma ́rton Karsai, Nicola Perra, Filippo Menczer and Alessandro Flammini

2017

Algebraic Analysis of Social Networks: Models, Methods and Applications Using R

By J. Antonio R. Ostoic

A test of structural features of granovetter’s strength of weak ties theory

Noah Friedkin

Department of Education, University of California, Santa Barbara, CA 93106, U.S.A.

Social Networks
Volume 2, Issue 4, 1980, Pages 411-422

https://www.sciencedirect.com/science/article/abs/pii/0378873380900064

Social network Analysis
Lecture 5–Strength of weak ties paradox

Donglei Du

Faculty of Business Administration, University of New Brunswick, NB Canada Fredericton E3B 9Y2 (ddu@unb.ca)

Click to access Lec5_weak_tie_handout.pdf

THE STRENGTH OF WEAK TIES: A NETWORK THEORY REVISITED

Mark Granovetter

STATE UNIVERSITY OF NEW YORK, STONY BROOK

Sociological Theory, Vol. 1 (1983), pp. 201-233
John Wiley & Sons
http://www.jstor.org/stable/202051 .

Social Interactions and Well-Being: The Surprising Power of Weak Ties

Gillian M. Sandstrom, Elizabeth W. Dunn
First Published April 25, 2014
https://doi.org/10.1177/0146167214529799

https://journals.sagepub.com/doi/abs/10.1177/0146167214529799

Information Flow Through Strong and Weak Ties in Intraorganizational Social Networks

Noah E Friedkin

UCSB

Social Networks 3, 1982

Click to access SNIflow.PDF

Time varying networks and the weakness of strong ties

Márton KarsaiNicola PerraAlessandro Vespignani

https://arxiv.org/abs/1303.5966

https://www.technologyreview.com/2013/03/28/83867/how-strong-social-ties-hinder-the-spread-of-rumours/

Strong and Weak Ties

Web Science (VU) (707.000)

Elisabeth Lex
KTI, TU Graz
April 20, 2015

Click to access strongweakties.pdf

Communication boundaries in networks

Trusina, Ala 

Rosvall, Martin 

Umeå University, Faculty of Science and Technology, Department of Physics.

Sneppen, Kim 

2005 (English)

In: Physical Review Letters, ISSN 0031-9007, E-ISSN 1079-7114, Vol. 94, no 23, p. 238701-

Rise of Debt and Market Based Finance

Rise of Debt and Market Based Finance

It is also known as Non Bank finance or Shadow Banking.

The key difference between traditional banking and shadow banking is fragmented credit chains in the shadow banking.

Traditional Banking does

  • Maturity Transformation
  • Liquidity Transformation
  • Credit Transformation

While traditional banking has backstops

  • Deposit Insurance
  • Central bank

Shadow Banks are not regulated and do not have advantage of backstops.

Hence they are susceptible to systemic risk and runs.

Questions

  • What is Market based Finance?
  • How big is the market?
  • Institutions?
  • Instruments?
  • Who are the borrowers?
  • Who are the investors?
  • What are the risks in market based finance?
  • Role of Central Banks?
  • How to minimize risks?
  • Regulations? Macro Prudential policies?
  • How are banks involved in market based finance?
  • How are they connected to each other and others?

Key Terms

  • Market based Finance MBF
  • Non Bank Credit Intermediation NCBI
  • Shadow Banking
  • Financial Stability
  • Systemic Risk
  • Liquidity Risk
  • Broker Dealers
  • Non Bank Finance NBF
  • Balance Sheet Economics
  • Market Makers
  • Capital Markets
  • Money Markets
  • Money View
  • Money Flows
  • Network Dynamics
  • Regulatory Arbitrage
  • Credit Chains
  • Fragmented Credit Chains
  • Financial Supply Chains
  • Credit Chain Length
  • Growth of Debt

Growth and Size of Market based Finance

Image Source: BANK AND NONBANK LENDING OVER THE PAST 70 YEARS

Image Source: Shining a Light on Shadow Banking

Image Source: The Shadow Banking System in the United States: Recent Developments and Economic Role

Image Source: Shining a Light on Shadow Banking

Image Source: NON-BANK FINANCE: TRENDS AND CHALLENGES

Image Source: THE GROWTH OF NON-BANK FINANCE AND NEW MONETARY POLICY TOOLS 

Image Source: SHADOW BANKING AND MARKET BASED FINANCE

Structural Dynamics of Banking and Financial System

Changes prior to Global Financial Crisis

  • Rise of Debt
  • Rise of Market Based Finance
  • Increase in capital flows both domestic and cross border

Debt dynamics is related to assets side of balance sheet of financial intemediatory.

Market based Finance is related to liabilities side of balance sheet of Financial Intermediatory.

If the chains of financial intermediation are long, then both assets and liabilities of each participant are linked.

Intermediation results in increase of capital flows. From money markets to capital markets. From deposits to loans. From liabilities to assets. There is both pull and push of money flows in the financial system. Demand for capital and supply of capital. They both are linked by banks and non bank finance. Growth of debt is linked to growth of money markets and non bank finance.

Size of Nonfinancial Business and Household Credit

Image Source: FINANCIAL STABILITY REPORT – NOVEMBER 2020

In a future post I will discuss debt in US and global financial system.

Please see my related posts for evolution of Financial System Complexity and Its dynamics.

Low Interest Rates and Banks’ Profitability – Update October 2020

Funding Sources and Liquidity for US Commercial Banks

Trends in Assets and Liabilities of Commercial Banks in the USA

Size and complexity arise together. Along with balance sheet expansion comes changes in links with counterparties (financial networks and interconnections).

Research continues in this area by several institutions and academics.

  • OECD
  • BIS
  • FED RESERVE
  • ECB
  • FSB
  • BOE
  • IMF
  • BOF
  • Others

Source: Structural developments in global financial intermediationThe rise of debt and non-bank credit intermediation

The global financial crisis of 2008 underlined the importance for policy makers in understanding the scale and types of financial intermediation in their economies. During the financial crisis, non-bank financial intermediation was of particular concern to authorities, as such forms of ‘shadow banking’, contributed to both the root causes of the crisis, the transmission of financial contagion, and the amplification of shocks.

As this report is published, the rapid spread of the novel coronavirus Covid-19 has caused a global health crisis, has brought economic activity in some sectors to a halt, and has presented the greatest challenge to the global financial system since 2008. As then, understanding financial intermediation activities is critical to mapping the faultlines in the global financial system and mounting effective policy responses.

However, the shape of financial intermediation has changed in important ways since the global financial crisis. Activities in non-bank intermediation, including market-based intermediaries like investment funds and securitised products, have grown and are increasingly interconnected with financial markets. Understanding the interplay between these elements, and the benefits and risks of each, offers a more complete understanding of how global finance can contribute to sustainable economic growth. It also helps provide the full picture needed to help policy makers prepare for and respond to shocks, including pandemics.

“Structural developments in global financial intermediation: The rise of debt and non-bank credit intermediation” shines a light on the evolution of global financial intermediation in three key ways. First, it maps the broad-based growth of financial intermediation relative to GDP in many advanced and emerging market economies, and with this growth a shift toward market-based finance. Second, it assesses the shift from equity to debt markets, and the growing imbalances in sovereign and corporate debt markets during a period of highly accommodative monetary policies. Third, it draws attention to key activities in credit intermediation that could contribute to structural vulnerabilities in the global financial system, including: a sharp rise of below-investment grade corporate debt, in particular leverage loans and collateralised loan obligations; the growth of open-ended investment funds that purchase high-yield debt and leveraged loans; and risks associated with the large stock of bank contingent convertible debt.

While these various activities have helped to satisfy investors’ reach for yield during years of market exuberance, they represent new potential faultlines of systemic risk in the event of exogenous shocks, be they from trade tensions, geopolitical risks or the current global pandemic. This report underlines the need for policy frameworks to adapt to market-based finance, and fully reflect the interaction between monetary, prudential, and regulatory tools on credit intermediation. It also underlines the need for dynamic microprudential and activities-based tools to help mitigate excessive risk taking with respect to liquidity and leverage.

By mapping the global financial system, evaluating growing imbalances and risks that could amplify shocks, and assessing the interaction between macro and regulatory tools, this report provides a practical complement to the OECD’s Policy Framework for Effective and Efficient Financial Regulations. Financial authorities should use this analysis to inform both their assessments of activities and risks, and efforts to maximise available tools to harness the benefits of market-based finance to support fair, efficient markets and sustainable economic growth.

Greg Medcraft Director, OECD Directorate for Financial and Enterprise Affairs

Image Source: UNDERSTANDING THE RISKS INHERENT IN SHADOW BANKING: A PRIMER AND PRACTICAL LESSONS LEARNED

Image Source: THE ECONOMICS OF SHADOW BANKING 

Image Source: IS SHADOW BANKING REALLY BANKING?

Table Source: SHADOW BANKING AND MARKET BASED FINANCE

Table 1. A Stylized View of Structural Characteristics of Credit-based Intermediation

Characteristic:Traditional BankingShadow BankingMarket-based Finance
Key Risk TransformationsLiquidity, maturity, leverageCredit enhancement,liquidity, maturity, leverageLess emphasis on credit enhancement and less opaque vs. shadow banking
Institutions Involved in Intermediation Single entityCan be many entities, interconnected through collateral chains and credit guaranteesSingle/few entities
Formal Ex-anteBackstopYesNo / IndirectNo
Implied Sponsor Supportn.a.Yes, can sometimes be contingent liabilitiesNo(insolvency remote)
Example of EntitiesCommercial bankSynthetic CDO, Structured Investment Vehicle (SIV), CNAV MMF, ABCP ConduitBond mutual fund, Distressed debt or PE partnership,Direct lending by pension fund
Main Form of LiabilitiesDebt and deposits,Wholesale & retail-financedDebt,Mainly wholesale financedHighly diverse –Short and long-term debt and equity,Retail & wholesale financed
Key Resulting Financial Stability Risk Systemic risk(institutional spillovers)Systemic risk(institutional spillovers)Shift in price of risk (market risk premia)

My Related Posts

Shadow Banking

Economics of Broker-Dealer Banks

Evolution of Banks Complexity

Low Interest Rates and International Capital Flows

Repo Chains and Financial Instability

Global Liquidity and Cross Border Capital Flows

The Dollar Shortage, Again! in International Wholesale Money Markets

Low Interest Rates and Banks’ Profitability – Update October 2020

Funding Sources and Liquidity for US Commercial Banks

Funding Strategies of Banks

Trends in Assets and Liabilities of Commercial Banks in the USA

Key sources of Research

The growth of non-bank finance and new monetary policy tools 

Adrien d’Avernas, Quentin Vandeweyer, Matthieu Darracq Pariès  

20 April 2020

https://voxeu.org/article/growth-non-bank-finance-and-new-monetary-policy-tools

Financial Stability Report

November 2019

Board of Governors of the Federal Reserve System

Financial Intermediaries, Financial Stability, and Monetary Policy

Tobias Adrian and Hyun Song Shin
Federal Reserve Bank of New York Staff Reports, no. 346 September 2008

US BROKER-DEALER LIQUIDITY IN THE TIME OF FINANCIAL CRISIS

https://www.shearman.com/perspectives/2020/05/us-broker-dealer-liquidity-in-the-time-of-financial-crisis

Unconventional monetary policy and funding liquidity risk

ECB

Structural developments in global financial intermediation

The rise of debt and non-bank credit intermediation

by

Robert Patalano and Caroline Roulet*

OECD

https://www.oecd-ilibrary.org/finance-and-investment/structural-developments-in-global-financial-intermediation-the-rise-of-debt-and-non-bank-credit-intermediation_daa87f13-en

Financial Stability Review, May 2020

ECB

https://www.ecb.europa.eu/pub/financial-stability/fsr/html/ecb.fsr202005~1b75555f66.en.html#toc1

Structural changes in banking after the crisis

Report prepared by a Working Group established by the Committee on the Global Financial System

The Group was chaired by Claudia Buch (Deutsche Bundesbank) and B Gerard Dages (Federal Reserve Bank of New York)

January 2018

BIS

BANK-BASED OR MARKET-BASED FINANCIAL SYSTEMS: WHICH IS BETTER?

Ross Levine

Working Paper 9138 http://www.nber.org/papers/w9138

NATIONAL BUREAU OF ECONOMIC RESEARCH

1050 Massachusetts Avenue
Cambridge, MA 02138
September 2002

Non-bank finance: trends and challenges

Financial Stability Review

Bank of France

2018

The Origins of Bank-Based and Market-Based Financial Systems: Germany, Japan, and the United States

Sigurt Vitols*

January 2001

Financial Stability Report

August 2020

Bank of England

Market-Based Finance:
Its Contributions and Emerging Issues

May 2016

Financial Conduct Authority

Bank-Based Versus Market-Based Financing: Implications for Systemic Risk

https://www.researchgate.net/publication/322088863_Bank-Based_Versus_Market-Based_Financing_Implications_for_Systemic_Risk

Off the radar: The rise of shadow banking in Europe 

Martin Hodula  

16 March 2020

https://voxeu.org/article/radar-rise-shadow-banking-europe

Global Monitoring Report on Non-Bank Financial Intermediation 2019

2020

FSB

https://www.fsb.org/2020/01/global-monitoring-report-on-non-bank-financial-intermediation-2019/

Global Monitoring Report on Non-Bank Financial Intermediation 2018

FSB 2019

https://www.fsb.org/2019/02/global-monitoring-report-on-non-bank-financial-intermediation-2018/

Global Shadow Banking Monitoring Report 2017

FSB 2018

https://www.fsb.org/2018/03/global-shadow-banking-monitoring-report-2017/

Global Shadow Banking Monitoring Report 2016

10 May 2017

FSB 2015 Report

FSB 2014 Report

https://www.fsb.org/wp-content/uploads/r_141030.pdf?page_moved=1

FSB 2013 Report

FSB 2012 Report

FSB 2011 Report

Shadow Banking: Monitoring Vulnerabilities and Strengthening Policy Tools

https://www.garp.org/#!/risk-intelligence/all/all/a1Z1W0000054xEzUAI

BANK-BASED AND MARKET-BASED FINANCIAL SYSTEMS: CROSS-COUNTRY COMPARISONS

Asli Demirguc-Kunt and Ross Levine*

June 1999

https://pdfs.semanticscholar.org/18e5/660bef2325f326bb8077bd0dd6f5225b1bf8.pdf?_ga=2.215410079.942675951.1605328042-1052966156.1604782392

Off the Radar: Exploring the Rise of Shadow Banking in the EU

Martin Hodula

https://www.cnb.cz/en/economic-research/research-publications/cnb-working-paper-series/Off-the-Radar-Exploring-the-Rise-of-Shadow-Banking-in-the-EU/

https://voxeu.org/article/radar-rise-shadow-banking-europe

Shadow Banking: Economics and Policy

Stijn Claessens, Zoltan Pozsar, Lev Ratnovski, and Manmohan Singh

IMF

2012

https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Shadow-Banking-Economics-and-Policy-40132

Bank-Based and Market-Based Financial Systems: Cross-Country Comparisons

A. Demirguc-Kunt

Published 1999

https://www.semanticscholar.org/paper/Bank-Based-and-Market-Based-Financial-Systems%3A-Demirguc-Kunt/cd8cf558db2f8404271050ba40408a28ac4fcbc4

Market-based finance: a macroprudential view

Speech given by
Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee

BOE/BIS

Asset Management Derivatives Forum, Dana Point, California Friday 9 February 2017

Shadow Banking and Market Based Finance

Tobias Adrian, International Monetary Fund 
Helsinki

September 14, 2017

https://www.imf.org/en/News/Articles/2017/09/13/sp091417-shadow-banking-and-market-based-finance

Transforming Shadow Banking into Resilient Market-based Finance

An Overview of Progress

12 November 2015

FSB

Mapping Market-Based Finance in Ireland

Simone Cima, Neill Killeen and Vasileios Madouros1,2 

Central Bank of Ireland
December 13, 2019

BANK AND NONBANK LENDING OVER THE PAST 70 YEARS

FDIC

Financial Stability Review

November 2019

ECB

Shadow Banking

Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky

FRBNY Economic Policy Review / December 2013

https://www.newyorkfed.org/research/epr/2013/0713adri.html

Shadow Banking and Market-Based Finance

Tobias Adrian and Bradley Jones

IMF

No 18/14

Why Shadow Banking Is Bigger Than Ever

DANIELA GABOR

https://jacobinmag.com/2018/11/why-shadow-banking-is-bigger-than-ever

The Non-Bank Credit Cycle

Esti Kemp, Ren ́e van Stralen, Alexandros P. Vardoulakis, and Peter Wierts

2018-076

Fed Reserve

The role of financial markets for economic growth

Speech delivered by Dr. Willem F. Duisenberg, President of the European Central Bank, at the Economics Conference “The Single Financial Market: Two Years into EMU” organised by the Oesterreichische Nationalbank in Vienna on 31 May 2001

https://www.ecb.europa.eu/press/key/date/2001/html/sp010531.en.html

Bank deleveraging, the move from bank to market-based financing, and SME financing

Gert Wehinger

OECD

OECD Journal: Financial Market Trends Volume 2012/1
© OECD 2012

Shadow Banking: A Review of the Literature

Tobias Adrian Adam B. Ashcraft

2012 FRBNY

The Global Pandemic and Run on Shadow Banks

FRBKC

2020

https://www.kansascityfed.org/en/publications/research/eb/articles/2020/global-pandemic-run-shadow-banks

Shadow Banking: The Rise, Risks, and Rewards of Non-Bank Financial Services

Roy J. Girasa

The Macroeconomics of Shadow Banking

ALAN MOREIRA and ALEXI SAVOV∗

THE JOURNAL OF FINANCE • 2017

Is Shadow Banking Really Banking?

Bryan J. Noeth ,  Rajdeep Sengupta

Saturday, October 1, 2011

FRBSL

https://www.stlouisfed.org/publications/regional-economist/october-2011/is-shadow-banking-really-banking

Three Essays on Capital Regulations and Shadow Banking

Diny Ghuzini
Western Michigan University, diny.ghuzini@wmich.edu

CLARIFYING THE SHADOW BANKING DEBATE: APPLICATION AND POLICY IMPLICATIONS

Amias Gerety 2017

Institute of International Economic Law Georgetown University Law Center

Commercial Banking and Shadow Banking

The Accelerating Integration of Banks and Markets and its Implications for Regulation

ARNOUD W. A. BOOT AND ANJAN V. THAKOR

(prepared as revised version of Chapter 3 in The Oxford University Press Handbook, The Accelerating Integration of Banks and Markets and its Implications for Regulation, 3rd edition.)

The Shadow Banking System in the United States: Recent Developments and Economic Role

Tresor Economics

France

2013

https://www.tresor.economie.gouv.fr/Articles/ccfd4180-fddb-4333-bd16-0b91f2daa18c/files/6ae6455a-92be-43a5-a94d-91b03b38a8d8

Shadow Banking: Policy Challenges for Central Banks

Thorvald Grung Moe*

Levy Economics Institute of Bard College

May 2014

BANKS, SHADOW BANKING, AND FRAGILITY

Stephan Luck and Paul Schempp

2014 ECB

Restructuring the Banking System to Improve Safety and Soundness

Thomas M. Hoenig
Vice Chairman of the Federal Deposit Insurance Corporation

Charles S. Morris
Vice President and Economist Federal Reserve Bank of Kansas City

Original version: May 2011 Revised: December 2012

Understanding the Risks Inherent in Shadow Banking: A Primer and Practical Lessons Learned

by David Luttrell Harvey Rosenblum and Jackson Thies

FRB Dallas

Shadow Banking Concerns: The Case of Money Market Funds

Saad Alnahedh† , Sanjai Bhagat

Towards a theory of shadow money

Daniela Gabor* and Jakob Vestergaard

The Economics of Shadow Banking 

Manmohan Singh

2013

Regulating the Shadow Banking System

GARY GORTON

ANDREW METRICK

Yale University

The Rise of Shadow Banking: Evidence from Capital Regulation

Rustom M. Irani, Raymakal Iyer, Ralf R. Meisenzahl, and Jos ́e-Luis Peydr ́o

2018-039

Fed Reserve

Shadow Banking: Background and Policy Issues

Edward V. Murphy

Specialist in Financial Economics

December 31, 2013

Shining a Light on Shadow Banking

The Clearing House

https://www.theclearinghouse.org/banking-perspectives/2015/2015-q4-banking-perspectives/articles/shining-a-light-on-shadow-banking

REGULATING SHADOW BANKING*

STEVEN L. SCHWARCZ

2011

Duke Law

Money Creation and the Shadow Banking System Adi Sunderam

Harvard Business School and NBER September 2014

https://dash.harvard.edu/bitstream/handle/1/27336543/sunderam_money-creation.pdf?sequence=1

Financial Crisis Inquiry Commission Report Chapter 2

Shadow Banking

THE SHADOW BANKING CHARADE

By Melanie L. Fein*

February 15, 2013

Assessing shadow banking – non-bank financial intermediation in Europe

No 10/ July 2016

by
Laurent Grillet-Aubert Jean-Baptiste Haquin Clive Jackson
Neill Killeen
Christian Weistroffer

ESRB

Shedding Light on Shadow Banking

Timothy Lane

Bank of Canada

shadow banking and capital markets

RISKS AND OPPORTUNITIES

Group of Thirty

Shadow Banking and Market Based Finance

Tobias Adrian, International Monetary Fund 
Helsinki

September 14, 2017

https://www.imf.org/en/News/Articles/2017/09/13/sp091417-shadow-banking-and-market-based-finance

Financial Stability Report – November 2020

Federal Reserve

https://www.federalreserve.gov/publications/2020-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/2019-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/2018-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/financial-stability-report.htm

Trends in Assets and Liabilities of Commercial Banks in the USA

Trends in Assets and Liabilities of Commercial Banks in the USA

To big to fail means too interconnected to fail.
As the balance sheets of banks have expanded so has their number of counterparties on both sides of balance sheets.

The US commercial banks have have expanded their balance sheets.

On assets side, the loans portfolio has expanded.

Low Interest Rates and Banks’ Profitability – Update October 2020

On liabilities side, the deposits and borrowings have increased.

US Federal Reserve publishes H8 report on Assets and Liabilities of the US commercial banks. Detailed information on aggregate data presented in this post can be obtained from it.

https://www.federalreserve.gov/releases/h8/h8notes.htm

On liabilities side, the borrowings from wholesale money markets and shadow banking contributed to systemic risk during 2008 financial crisis. Please see my posts on this subject.

Funding Strategies of Banks

Shadow Banking

There were also capital flows in US markets from foreign banks and other markets.

Low Interest Rates and International Capital Flows

On liabilities side, because of increased borrowings from short term markets, the financial interconnections have also increased resulting in systemic risk and financial contagion.

On assets side, because of increased volumes of loan portfolios, the systemic risk and chances for financial contagion have increased.

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Contagion in Financial (Balance sheets) Networks

For analytical framework, accounting approach (Post Keynesian Economics) is one of the option.

Balance Sheet Economics – Financial Input-Output Analysis (using Asset Liability Matrices) – Update March 2018

Foundations of Balance Sheet Economics

Economics of Money, Credit and Debt

Morris Copeland and Flow of Funds accounts

Stock-Flow Consistent Modeling

Key Terms

  • Money View
  • Money Flows
  • Stocks and Flows
  • System Dynamics
  • Business Dynamics
  • Business Strategy
  • Asset Liability Management ALM
  • Balance Sheet Economics
  • Monetary Policy
  • Interest Rates
  • Credit
  • Debt
  • Money
  • Balance Sheet Expansion
  • Systemic Risk
  • Interconnectivity
  • Loan Portfolio
  • To big to fail
  • Networks
  • Funding Strategy
  • Market Liquidity
  • Funding Liquidity
  • Deposits
  • Interest Income
  • Non Interest Income
  • Borrowings
  • Wholesale Money Markets
  • Shadow Banking
  • International Capital Flows
  • Round Tripping
  • Global Liquidity
  • Eurodollar Market
  • Money Market Mutual Funds
  • Quadruple Accounting
  • Morris Copeland
  • Hyman Minsky
  • Wynn Godley
  • Perry Mehrling

Image Source: Liberty Street Economics 2017

AVERAGE NET INTEREST MARGIN OF BANKS IN THE UNITED STATES FROM 1995 TO 2019
Image Source: Statista

NET INTEREST MARGIN FOR ALL U.S. BANKS (USNIM)
Image Source: FRED

Total Assets, All Commercial Banks (TLAACBW027SBOG)
Image Source: FRED

Total Liabilities, All Commercial Banks (TLBACBW027NBOG)
Image Source: FRED

DEPOSITS, ALL COMMERCIAL BANKS (DPSACBW027SBOG)
Image Source: FRED

My Related Posts

Balance Sheet Economics – Financial Input-Output Analysis (using Asset Liability Matrices) – Update March 2018

Foundations of Balance Sheet Economics

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Funding Strategies of Banks

Economics of Money, Credit and Debt

Low Interest Rates and International Capital Flows

Low Interest Rates and Banks’ Profitability – Update October 2020

Morris Copeland and Flow of Funds accounts

Key Sources of Research

Deposits, All Commercial Banks (DPSACBW027SBOG)

https://fred.stlouisfed.org/series/DPSACBW027SBOG

Total Liabilities, All Commercial Banks (TLBACBW027NBOG)

https://fred.stlouisfed.org/series/TLBACBW027NBOG

TOTAL ASSETS, ALL COMMERCIAL BANKS (TLAACBW027SBOG)

https://fred.stlouisfed.org/series/TLAACBW027SBOG

Between deluge and drought:
The future of US bank liquidity and funding

Rebalancing the balance sheet during turbulent times

McKinsey

2013

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Risk/Working%20papers/48_Future%20of%20US%20funding.ashx

Assets and Liabilities of Commercial Banks in the United States – H.8

https://www.federalreserve.gov/releases/h8/h8notes.htm

The geography of dollar funding of non-US banks1

The Hidden Geometry of Trade Networks

The Hidden Geometry of Trade Networks

 

From The hidden hyperbolic geometry of international trade: World Trade Atlas 1870–2013

Tradenetwork

 

Key Terms:

  • Trade Networks
  • Complex Networks
  • Preferential Attachment
  • Positive Feedback
  • Fractals
  • Power Laws
  • Hyperbolic Geometry
  • Economic Geography
  • Regional Trading Blocks
  • Bilateral Trade
  • Multilateral Trade
  • Free Trade Agreements
  • Metabolism of a City
  • Metabolism of a Nation
  • Metabolism of the World
  • Industrial Ecology
  • Social Ecology
  • Growth and Form

 

 

From The hidden hyperbolic geometry of international trade: World Trade Atlas 1870–2013

Here, we present the World Trade Atlas 1870–2013, a collection of annual world trade maps in which distance combines economic size and the different dimensions that affect international trade beyond mere geography. Trade distances, based on a gravity model predicting the existence of significant trade channels, are such that the closer countries are in trade space, the greater their chance of becoming connected. The atlas provides us with information regarding the long-term evolution of the international trade system and demonstrates that, in terms of trade, the world is not flat but hyperbolic, as a reflection of its complex architecture. The departure from flatness has been increasing since World War I, meaning that differences in trade distances are growing and trade networks are becoming more hierarchical. Smaller-scale economies are moving away from other countries except for the largest economies; meanwhile those large economies are increasing their chances of becoming connected worldwide. At the same time, Preferential Trade Agreements do not fit in perfectly with natural communities within the trade space and have not necessarily reduced internal trade barriers. We discuss an interpretation in terms of globalization, hierarchization, and localization; three simultaneous forces that shape the international trade system.

From The hidden hyperbolic geometry of international trade: World Trade Atlas 1870–2013

When it comes to international trade, the evidence suggests that we are far from a distance-free world. Distance still matters1 and in many dimensions: cultural, administrative or political, economic, and geographic. This is widely supported by empirical evidence concerning the magnitude of bilateral trade flows. The gravity model of trade2–4, in analogy to Newton’s law of gravitation, accurately predicts that the volume of trade exchanged between two countries increases with their economic sizes and decreases with their geographical separation. The precision of that model improves when it is supplemented with other factors, such as colony–colonizer relationships, a shared common language, or the effects of political borders and a common currency5–7. Despite the success of the gravity model at replicating trade volumes, it performs very poorly at predicting the existence of a trade connection between a given pair of countries8; an obvious limitation that prevents it from explaining the striking regularities observed in the complex architecture of the world trade web9–13. One of the reasons for this flaw is that the gravity model focuses on detached bilateral relationships and so overlooks multilateral trade resistance and other network effects14.

Another drawback of the classical gravity model is that geography is not the only factor that defines distance in international trade. Here, we use a systems approach based on network science methodologies15,16 to propose a gravity model for the existence of significant trade channels between pairs of countries in the world. The gravity model is based on economic sizes and on an effective distance which incorporates different dimensions that affect international trade, not only geography, implicitly encoded on the complex patterns of trade interactions. Our gravity model is based on the connectivity law proposed for complex networks with underlying metric spaces17,18 and it can be represented in a pure geometric approach using a hyperbolic space, which has been conjectured as the natural geometry underlying complex networks19–22. In the hyperbolic trade space, distance combines economic size and effective distance into a sole distance metric, such that the closer countries are in hyperbolic trade space, the greater their chance of becoming connected. We estimate this trade distance from empirical data using adapted statistical inference techniques23,24, which allow us to represent international trade through World Trade Maps (WTMs). These define a coordinate system in which countries are located in relative positions according to the aggregate trade barriers between them. The maps are annual and cover a time span of fourteen decades. The collection as a whole, referred to as the World Trade Atlas 1870–2013, is presented via spatial projections25, Table S5, and trade distance matrices, Table S6. Beyond the obvious advantages of visualization, the World Trade Atlas 1870–2013 significantly increases our understanding of the long-term evolution of the international trade system and helps us to address a number of important and challenging questions. In particular: How far, in terms of trade, have countries traveled in recent history? What role does each country play in the maps and how have those roles evolved over time? Are Preferential Trade Agreements (PTAs) consistent with natural communities as measured by trade distances? Has the formation of PTAs led to lesser or greater barriers to trade within blocs? Is trade distance becoming increasingly irrelevant?

The answers to these questions can be summarized by asserting that, in terms of trade, the world is not flat; it is hyperbolic. Differences in trade distances are growing and becoming more heterogeneous and hierarchical; at the same time as they define natural trade communities—not fully consistent with PTAs. Countries are becoming more interconnected and clustered into hierarchical trade blocs than ever before.

Please see my related posts:

Networks and Hierarchies

Increasing Returns, Path Dependence, Circular and Cumulative Causation in Economics

Relational Turn in Economic Geography

Boundaries and Networks

Multilevel Approach to Research in Organizations

Regional Trading Blocs and Economic Integration

Increasing Returns and Path Dependence in Economics

Growth and Form in Nature: Power Laws and Fractals

Key Sources of Research:

 

The hidden hyperbolic geometry of international trade: World Trade Atlas 1870–2013

Guillermo García-Pérez  Marián Boguñá, Antoine Allard & M. Ángeles Serrano

2016

Click to access srep33441.pdf

 

 

Uncovering the hidden geometry behind metabolic networks

 

Molecular BioSystems · March 2012

 

Click to access 1109.1934.pdf

 

 

The hidden geometry of complex networks

M. ÁNGELES SERRANO

 

Click to access s1_to_pdf.pdf

Click to access Curs_Intro_networks.pdf

 

 

 

Deciphering the global organization of clustering in real complex networks

Pol Colomer-de-Simo ́n1, M. A ́ ngeles Serrano1, Mariano G. Beiro ́2, J. Ignacio Alvarez-Hamelin2 & Maria ́n Bogun ̃a ́1

 

Click to access srep02517.pdf

 

 

 

 

 

Hidden geometric correlations in real multiplex networks

 

Kaj-KoljaKleineberg,1,∗ Mari ́anBogun ̃ ́a,1 M.A ́ngelesSerrano,2,1 andFragkiskosPapadopoulos

Click to access 1601.04071.pdf

 

 

 

 

 

Emergent Hyperbolic Network Geometry

Ginestra Bianconi1 & Christoph Rahmede

 

Click to access srep41974.pdf

 

 

 

 

The geometric nature of weights in real complex networks

 

Antoine Allard1,2, M. A ́ngeles Serrano1,2,3, Guillermo Garc ́ıa-Pe ́rez1,2 & Maria ́n Bogun ̃a ́

Click to access ncomms14103.pdf

 

 

 

Network Geometry and Complexity

Daan Mulder · Ginestra Bianconi

 

Click to access 1711.06290.pdf

 

 

 

Multiscale unfolding of real networks by geometric renormalization

 

Guillermo Garc ́ıa-P ́erez,1,2 Mari ́an Bogun ̃ ́a,1,2 and M. A ́ngeles Serrano

 

Click to access 1706.00394.pdf

 

 

 

Topology of the World Trade Web

Ma A ́ngeles Serrano and Mari ́an Bogun ̃a ́

 

Click to access 0301015.pdf

 

 

Patterns of dominant flows in the world trade web

 

M. A ́ngeles Serrano,1 Mari ́an Bogun ̃ ́a,2 and Alessandro Vespignani3,4

 

Click to access 0704.1225.pdf

 

 

 

 

Clustering and the hyperbolic geometry of complex networks

Elisabetta Candellero and Nikolaos Fountoulakis

 

Click to access paper8waw14.pdf

 

 

 

 

Hyperbolic Geometry of Complex Networks

 

Dmitri Krioukov, Fragkiskos Papadopoulos, Maksim Kitsak, Amin Vahdat, and Mari ́an Boguna

Click to access hyperbolic_geometry_complex.pdf

 

 

 

 

 

On Hyperbolic Geometry Structure of Complex Networks

Wenjie Fang

 

Click to access 531c6644768ad78e86843e297fed442769cb.pdf

 

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

 

 

From http://www.unwater.org/water-facts/water-food-and-energy/

Facts and Figures

  • Agriculture accounts for 70% of global water withdrawal. (FAO)
  • Roughly 75% of all industrial water withdrawals are used for energy production. (UNESCO, 2014)
  • The food production and supply chain accounts for about 30% of total global energy consumption. (UNESCO, 2012)
  • 90% of global power generation is water-intensive. (UNESCO, 2014)
  • Global water demand (in terms of water withdrawals) is projected to increase by 55% by 2050, mainly because of growing demands from manufacturing (400% increase). More than 40% of the global population is projected to be living in areas of severe water stress by 2050. (UNESCO, 2014)
  • Power plant cooling is responsible for 43% of total freshwater withdrawals in Europe (more than 50% in several countries), nearly 50% in the United States of America, and more than 10% of the national water cap in China. (UNESCO, 2014)
  • By 2035, water withdrawals for energy production could increase by 20% and consumption by 85%, driven via a shift towards higher efficiency power plants with more advanced cooling systems (that reduce water withdrawals but increase consumption) and increased production of biofuel. (UNESCO, 2014)
  • There is clear evidence that groundwater supplies are diminishing, with an estimated 20% of the world’s aquifers being over-exploited, some critically so. Deterioration of wetlands worldwide is reducing the capacity of ecosystems to purify water. (UNESCO, 2014)
  • It typically takes 3,000 – 5,000 litres of water to produce 1 kg of rice, 2,000 litres for 1kg of soya, 900 litres for 1kg of wheat and 500 litres for 1kg of potatoes. (WWF).
  • While almost 800 million people are currently hungry, by 2050 global food production would need to increase by 50% to feed the more than 9 billion people projected who live on our planet (FAO/IFAD/UNICEF/WFP/WHO, 2017).

 

From Background paper for the Bonn 2011 Nexus Conference: THE WATER, ENERGY AND FOOD SECURITY NEXUS

 

nexus2

 

 

From How Shell, Chevron and Coke tackle the energy-water-food nexus

We know how important food, water and energy are to our daily lives, but what happens when we fail to value them as critical, interconnected resources for our economy?

In the summer of 2012, the U.S. was affected by one of the worst droughts in recent decades. Eighty percent of U.S. farms and ranches were affected, crop losses exceeded $20 billion and unforeseen ripple effects followed.

With corn crops withering from the lack of rainfall, prices for food and livestock feed supplies rose, as did ethanol, predominantly sourced from corn. Numerous power plants had to scale back operations or even shut down because the water temperatures of many rivers, lakes and estuaries had increased to the point where they could not be used for cooling. Household, municipal and farm wells in the Midwest had to be extended deeper into rapidly depleting aquifers to make up for the lack of rainfall, draining groundwater supplies and demanding more electricity to run the pumps. It is estimated that consumers will feel these ripple effects for years to come — over the next year alone, this impact could result in personal costs up to $50 billion.

Now more than ever, our infrastructure is built on an interlinked system for the production and use of energy, water and food. Water is needed for almost all forms of energy production and power generation, energy is required to treat and transport water, and both water and energy are needed to produce food.

This interconnection, or energy-water-food nexus, underscores the global challenges that we face as a society. The growing global population, increased wealth and urbanization will continue to stress energy, water and food supplies. Climate change and unsustainable development practices will exacerbate them. In preparing for a population that could top 10 billion by 2050, according to U.N. estimates, in the next 15 to 20 years alone we will need 30 percent more water, 45 percent more energy and 50 percent more food.

Consvation International’s Business & Sustainability Council (PDF) examined the corporate risk and opportunities related to the energy-water-food nexus. The nexus is still new in the minds of many corporations, but CI sees several examples of companies broadening their strategies to build synergistic solutions.

Shell shines the spotlight on the pressures from the energy-water-food stress nexus in its 2013 report, “The New Lens Scenario.” The company is using scenario planning to test and collaborate on the design of synergistic solutions to tackle these interlinked resource constraints. In British Columbia, Shell collaborated with the city of Dawson Creek to build a reclaimed water facility that virtually eliminated its need to draw on local freshwater sources for the operation of a natural gas venture. It also worked with the World Business Council for Sustainable Development and the University of Utrecht to develop a new methodology that could more accurately estimate the amount of water needed to generate energy from different sources — oil, gas, coal, nuclear and biofuels — using different technologies and in different locations.

In Kern County, about 100 miles from Los Angeles and home to Chevron’s largest California oil field, Chevron partnered with the Cawelo Water District to provide much needed water to local farmers for agricultural use. Water is a significant byproduct from steam flooding, a technology employed to extract thick, viscous oil out of the ground. For every barrel of oil, 10 barrels of water are produced, about 700,000 gallons per day. Chevron reclaims about one-third to generate new steam, and provides most of the remaining treated water to the Cawelo Water District to distribute to 160 farmers to irrigate 45,000 acres of crops, such as almonds, grapes, pistachios and citrus. This innovative solution is critical to creating a more sustainable local water supply and helping Kern County growers keep agriculture thriving in the region.

Since 2005, The Coca-Cola Company has set an ambitious water security commitment for its beverages and operations. In order to meet its goal, it implemented a series of technical and natural solutions in nearly 400 community water projects in more than 90 countries. These community water partnerships include rainwater harvesting, drip irrigation, agricultural water efficiency improvements and protecting watersheds. The company has taken an even broader perspective, enhancing the ability of watersheds to absorb threats associated with the uncertainties around climate change, and increased demands for water, energy and food from a burgeoning population.

Ensuring energy, water and food security on a global level requires equal consideration of the interdependency among all three systems and the underlying natural capital that supports them.

CI believes that addressing the stress nexus requires collaboration among government, business and civil society. Public-private partnerships offer an innovative way to leverage expertise and financing in order to pilot practical, scalable and collaborative solutions. The Sustainable Landscape Partnership being piloted in Indonesia with support from CI, USAID and the Walton Family Foundation looks to understand integrated approaches to build local economies while reducing deforestation and ensuring food and water security.

Lack of data specific to the nexus is currently a limiting factor in building solutions. Improved frameworks to price natural resources such as water will be critical — one reason CI is engaged with WAVES and the TEEB for Business Coalition. CI is also piloting a game-changing monitoring system called Vital Signs in Africa to provide near real-time ecological and social data and diagnostic tools to guide agricultural development decisions and monitor their outcomes. As we continue to pilot models that demonstrate resiliency of landscapes, open platforms for information sharing will generate innovations and efficiencies.

Combined together, this integrated approach will be critical to fully understanding where critical nexus interactions lie, where they are most susceptible and how we can meaningfully make better decisions, for this generation and the next.

 

Please see my related post:

Jay W. Forrester and System Dynamics

Art of Long View: Future, Uncertainty and Scenario Planning

 

 

Key Sources of Research:

 

 

World Water Development Report 2014

UN Water

http://www.unwater.org/publications/world-water-development-report-2014-water-energy/

 

Nexus in the Media

 

https://www.water-energy-food.org/news/media/recent/34/

 

 

Tools and Databases

 

https://www.water-energy-food.org/resources/tools-and-databases/

 

 

 

The Energy-Water-Food Nexus: The Emerging Challenge to Sustainable Prosperity

Forbes

2012

https://www.forbes.com/sites/francisvorhies/2012/09/09/the-energy-water-food-nexus-the-emerging-challenge-to-sustainable-prosperity/#361c315557bd

 

 

 

The Food, Water, Energy Nexus

Published on Thursday, 20 March 2014

 

Asian Development Bank

https://blogs.adb.org/blog/food-water-energy-nexus

 

 

 

How Shell, Chevron and Coke tackle the energy-water-food nexus

https://www.greenbiz.com/blog/2013/10/30/shell-chevron-coke-energy-water-food-nexus

 

 

 

 

Understanding the Stress Nexus

Shell International

Click to access stress-nexus-booklet.pdf

 

 

 

The Energy | Water | Food Nexus

Conservation International

Click to access BSC_Resources_vol2.pdf

 

 

 

Energy-water-food stress nexus

Royal Geographical Society

Energy-water-food stress nexus

 

 

 

A review of the current state of research on the water, energy, and food nexus

 

2016

https://www.sciencedirect.com/science/article/pii/S2214581815001251

https://ac.els-cdn.com/S2214581815001251/1-s2.0-S2214581815001251-main.pdf?_tid=08fc48aa-5ee7-4cc9-9858-084df130706e&acdnat=1524697246_c516ec9ea24d602062e2cb262cfbc493

 

 

 

The Water–Energy–Food Security Nexus: Towards a practical planning and decision-support framework for landscape investment and risk management

 

Livia Bizikova
Dimple Roy
Darren Swanson
Henry David Venema
Matthew McCandless

IISD

2013

Click to access wef_nexus_2013.pdf

 

 

 

 

Tracing the water-energy-food nexus: description, theory and practice.

Leck, Hayley, Conway, Declan, Bradshaw, Michael and Rees, Judith A.

(2015)

Geography Compass, 9 (8). pp. 445-460. ISSN 1749-8198

Click to access Water_energy_food.pdf

 

 

 

BRIDGING THE WATER AND FOOD GAP: THE ROLE OF THE
WATER-ENERGY-FOOD NEXUS

RABI H. MOHTAR,
AMJAD T. ASSI,
BASSEL T. DAHER

United Nations University

Click to access WorkingPapers_No5.pdf

 

 

 

Tools for analyzing the water-food-energy-ecosystems nexus

Compiled for UNECE by the Energy Systems Analysis group of the Royal Institute of Technology (KTH), Stockholm

September 2015

 

Click to access Nexus_tools_final_for_web.pdf

 

 

 

 

Energy -Water-Food Nexus

D.L. Keairns, R.C. Darton, and A. Irabien

 

https://www.researchgate.net/publication/299485820_Energy_-Water-Food_Nexus

 

 

 

 

Understanding the Energy-Water Nexus

Matthew Halstead
Tom Kober
Bob van der Zwaan

September 2014

 

Click to access e14046.pdf

 

 

 

 

“Towards sustainable synergy between water, energy and food”

 

Click to access agenda-and-backgrounds.pdf

 

 

 

 

WATER-ENERGY-FOOD NEXUS FOR THE REVIEW OF SDG 7

UN

2018

Click to access 17483PB_9_Draft.pdf

 

 

 

 

GOVERNANCE IN THE WATER-ENERGY-FOOD NEXUS:
GAPS AND FUTURE RESEARCH NEEDS

Nina Weitz, Claudia Strambo, Eric Kemp-Benedict, Måns Nilsson

SEI

2017

Click to access sei-2017-wp-nexus-governance-weitz-1.pdf

 

 

 

 

Water, Food and Energy

UN

http://www.unwater.org/water-facts/water-food-and-energy/

 

 

 

WATER, FOOD AND ENERGY NEXUS CHALLENGES

 

WBCSD

Click to access water-food-and-energy-nexus-challenges-wbcsd-2014.pdf

 

 

 

 

A bottom-up approach to the nexus of energy, food and water security in the Economic Community of West African States (ECOWAS) region

Prof. Subhes Bhattacharyya
Mr. Nicola Bugatti
Mr. Hannes Bauer

2015

Click to access Bhattacharyya-thinkpiece_2015.pdf

 

 

 

Understanding the Nexus. Background Paper for the Bonn2011
Conference: The Water, Energy and Food Security Nexus.

Hoff, H.

(2011).

Stockholm Environment Institute, Stockholm.

Click to access understanding_the_nexus.pdf

 

 

 

Anatomy of a buzzword: the emergence of ‘the
water-energy-food nexus’ in UK natural resource debates

Rose Cairns

Anna Krzywoszynska*

2016

Click to access EnvScPol%20AK%20RC%20nexus.pdf

 

 

 

Understanding the Nexus of Food, Water, and Energy

AT Kearney

http://www.atkearney.com.au/documents/10192/424058/Understanding_the_Nexus_of_Food-Water-and_Energy.pdf/04e49895-077c-4c86-8981-77aa287cb34c

 

 

 

 

A quick scan

Water-food-energy nexus

Stijn Reinhard, Jan Verhagen, Wouter Wolters and Ruerd Ruben

 

Click to access 6bec946b-792c-469b-ba07-5eec5c04b563_2017-096%20Reinhard_def.pdf

 

 

 

The Circular Economy and the Water-Energy-Food Nexus

2015

Click to access pp715-water-energy-food-nexus.pdf

 

 

 

The global food – water – energy nexus

Rabobank

Click to access 20161121-Report_Rabobank.pdf

 

 

 

 

Water Food Energy Climate Nexus

World Economic Forum

2011

Click to access WEF_WI_WaterSecurity_WaterFoodEnergyClimateNexus_2011.pdf

 

 

 

Development of Pardee Rand Water Energy Food Security Index

RAND

 

Click to access RAND_TL165.pdf

 

 

 

 

Review of the Current State of Research on the Water, Energy, and
Food Nexus

by
Aiko Endo, Izumi Tsurita, Kimberly Burnett,
And Pedcris M. Orencio

Click to access WP_2016-7.pdf

 

 

Mitigating Risks and Vulnerabilities in the Energy-Food-Water Nexus in Developing Countries

Sustainability Institute

2015

Click to access 61478_EFW-Nexus-final-report-Hyperlinked.pdf

 

 

CARBOHYDRATES, H2O, AND HYDROCARBONS:
GRAIN SUPPLY SECURITY AND THE FOOD-WATERENERGY
NEXUS IN THE ARABIAN GULF REGION

Gabriel Collins, J.D.
Baker Botts Fellow in Energy & Environmental Regulatory Affairs
June 2017

 

Click to access CES-pub-QLC_Nexus-061317.pdf

 

 

 

Managing the food,water,and energy nexus for achieving the
Sustainable Development Goals in South Asia

Golam Rasul

2015

Click to access Managing_the_food%2Cwater%2Cand_energy_nexus_for_achieving_the….pdf

 

 

 

The Water-Energy Nexus and Urban Metabolism – Connections in Cities

Steven Kenway

January 2013

Click to access UWSRA-tr100.pdf

 

 

Thinking about Water Differently
Managing the Water–Food–Energy Nexus

ADB

2013

Click to access ADB-2013-Thinking-about-water-differently_1.pdf

 

 

 

Walking the Nexus Talk:
Assessing the Water-Energy-Food Nexus
in the Context of the Sustainable Energy for All Initiative

FAO

http://wedocs.unep.org/bitstream/handle/20.500.11822/19556/Walking_the_Nexus_Talk.pdf?sequence=1

 

 

 

 

The 15 projects that will take on the food-water-energy nexus

https://jpi-urbaneurope.eu/news/the-15-projects-that-will-take-on-the-food-water-energy-nexus/

 

 

 

WATER-FOOD-ENERGY NEXUS IN ASIA AND THE PACIFIC

UNESCAP

Click to access Water-Food-Nexus%20Report.pdf

 

 

 

Food, Water and Energy Nexus in India

 

Click to access modi.pdf

 

 

 

The Food-Energy-Water Nexus

(GEO/NRSM 595)

University of Montana

Click to access Core%20Course%2017.pdf

 

 

 

Water–food–energy nexus with changing agricultural scenarios in
India during recent decades

Beas Barik1, Subimal Ghosh1,2, A. Saheer Sahana1, Amey Pathak1, and Muddu Sekhar

2017

Click to access hess-21-3041-2017.pdf

 

 

 

 

The Energy–Water–Food Nexus at Decentralized Scales

Lucy Stevens and Mary Gallagher, Practical Action, UK

Click to access PPEBP3%2BONLINE.pdf

 

 

 

 

Making governance work for water–energy–food nexus approaches

By Andrew Scott

 

Click to access Working-paper_CDKN_Making-governance-work-for-water-energy-food-nexus-approaches.pdf

 

 

 

Food, Water and Energy: Know the Nexus

 

Click to access knowthenexus_final_051513.pdf

 

 

 

 

Global Trends 2030: Alternative Worlds
a publication of the National Intelligence Council

DNI USA

2013

Click to access GlobalTrends_2030.pdf

 

 

 

GLOBAL TRENDS

PARADOX OF PROGRESS
A publication of the National Intelligence Council

2017

Click to access GT-Full-Report.pdf

 

 

 

Global Trends

DNI

https://www.dni.gov/index.php/global-trends-home

https://www.dni.gov/index.php/digital-extras/previous-reports

 

 

 

Understanding Water- Energy-
Food Nexus from Mountain Perspective

David Molden, Aditi Mukherji, Golam Rasul, Arun Shrestha,
Ramesh Vaidya, Shahriar M. Wahid and Philippus Wester

Click to access C06_Golam.pdf

 

 

 

Regulating the water-energy-food nexus: Interdependencies, transaction costs and procedural justice

 

https://www.sciencedirect.com/science/article/pii/S1462901117300540

 

 

 

Innovating at the food, water, and energy interface

Click to access qt7k96k7wf.pdf

 

 

 

The Water-Energy-Food Nexus. A New Approach in Support of Food Security and Sustainable Agriculture

FAO

http://www.fao.org/policy-support/resources/resources-details/en/c/421718/

Wassily Leontief and Input Output Analysis in Economics

Wassily Leontief and Input Output Analysis in Economics

 

 

Wassily Leontief: The Concise Encyclopedia of Economics | Library of Economics and Liberty

From the time he was a young man growing up in Saint Petersburg, Wassily Leontief devoted his studies to input-output analysis. When he left Russia at the age of nineteen to begin the Ph.D. program at the University of Berlin, he had already shown how leon walras’s abstract equilibrium theory could be quantified. But it was not until many years later, in 1941, while a professor at Harvard, that Leontief calculated an input-output table for the American economy. It was this work, and later refinements of it, that earned Leontief the Nobel Prize in 1973.

Input-output analysis shows the extensive process by which inputs in one industry produce outputs for consumption or for input into another industry. The matrix devised by Leontief is often used to show the effect of a change in production of a final good on the demand for inputs. Take, for example, a 10 percent increase in the production of shoes. With the input-output table, one can estimate how much additional leather, labor, machinery, and other inputs will be required to increase shoe production.

Most economists are cautious in using the table because it assumes, to use the shoe example, that shoe production requires the inputs in the proportion they were used during the time period used to estimate the table. There’s the rub. Although the table is useful as a rough approximation of the inputs required, economists know from mountains of evidence that proportions are not fixed. Specifically, when the cost of one input rises, producers reduce their use of this input and substitute other inputs whose prices have not risen. If wage rates rise, for example, producers can substitute capital for labor and, by accepting more wasted materials, can even substitute raw materials for labor. That the input-output table is inflexible means that, if used literally to make predictions, it will necessarily give wrong answers.

At the time of Leontief’s first work with input-output analysis, all the required matrix algebra was done using hand-held calculators and sheer tenacity. Since then, computers have greatly simplified the process, and input-output analysis, now called “interindustry analysis,” is widely used. Leontief’s tables are commonly used by the World Bank, the United Nations, and the U.S. Department of Commerce.

Early on, input-output analysis was used to estimate the economy-wide impact of converting from war production to civilian production after World War II. It has also been used to understand the flow of trade between countries. Indeed, a 1954 article by Leontief shows, using input-output analysis, that U.S. exports were relatively labor intensive compared with U.S. imports. This was the opposite of what economists expected at the time, given the high level of U.S. wages and the relatively high amount of capital per worker in the United States. Leontief’s finding was termed the Leontief paradox. Since then, the paradox has been resolved. Economists have shown that in a country that produces more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of its imports.

Throughout his life Leontief campaigned against “theoretical assumptions and nonobserved facts” (the title of a speech he delivered while president of the American Economic Association, 1970–1971). According to Leontief too many economists were reluctant to “get their hands dirty” by working with raw empirical facts. To that end Wassily Leontief did much to make quantitative data more accessible, and more indispensable, to the study of economics.


Selected Works

1941. The Structure of American Economy, 1919–1929. Cambridge: Harvard University Press.

1966. Essays in Economics: Theories and Theorizing. New York: Oxford University Press.

 

From NY Times

Wassily Leontief, Economist Who Won a Nobel, Dies at 93

 

Wassily Leontief, who won the Nobel prize in economics in 1973 for his analyses of America’s production machinery, showing how changes in one sector of the economy can exact changes all along the line, affecting everything from the price of oil to the price of peanut butter, died Friday night at the New York University Medical Center. He was 93.

His analytic methods, as the Nobel committee observed, were adopted and became a permanent part of production planning and forecasting in scores of industrialized nations and in private corporations all over the world.

Following the model of his so-called input-output analysis, General Electric, for example, was able to load data from 184 sectors of the economy — such as energy, home construction and transportation — into a mammoth computer to help it predict how the energy crisis brought on by the Arab oil boycott in 1973 would affect public demand for its products and services, from light bulbs to turbines.

A well-known academic figure, Mr. Leontief was the director of the Institute for Economic Analysis of New York University from 1975 until 1991; even after his retirement he still taught at the university into his 90’s. Before coming to N.Y.U. he taught economics at Harvard for 44 years and directed large research projects there as well.

Mr. Leontief was a thinker who often complained that too many of his academic colleagues spent too much time staring out their office windows instead of being out in the field, as any good economist ought to be, counting things. ”Facts,” he said. ”You have to have facts. Theories aren’t good unless you have facts to back them.”

When asked how he developed the input-output analysis recognized by his Nobel memorial prize, he would invariably begin, ”Oh, it’s really very simple — what I wanted to do was collect facts.” The facts he sought were those that explained how segments of production were interconnected.

He showed that if you carefully studied changes in the cost and components of one type of product, you could determine the resulting changes in cost and components of others along the production chain.

Suppose you have a sudden rise the price of oil or steel? Mr. Leontief taught government officials and corporate executives to track how this influenced the costs of production in other segments of a local or national economy, both within an industry or more broadly across many industries and many nations.

Wassily Leontief was born Aug. 5, 1905, in St. Petersburg, the son of Wassily W. Leontief, an economist, and the former Eugenia Bekker. A brilliant student, he was allowed to enroll when he was only 15 at the newly renamed University of Leningrad. But he got in trouble by expressing vehement opposition to the lack of intellectual and personal freedom under the country’s Communist regime, which had taken power three years earlier. He was arrested as he was nailing up anti-Communist posters on the wall of a military barracks and placed in solitary confinement. Released after several days, he promptly resumed his anti-Communist activities and was arrested several more times.

Finally, in 1925, he was allowed to leave the country, a turn of fate he attributed to a growth on his neck. He said the authorities believed that the growth was cancerous and that he would die and be of no use to the state. He left Russia to resume his studies in economics at the University of Berlin, and his parents soon followed. The growth was benign and he completed his doctorate in 1929. He spent a year as an economist advising the Government of China, particularly on the planning of a new railroad network.

Then he came to the United States and worked briefly in New York at the National Bureau of Economic Research, where his published work quickly attracted attention, and Harvard invited him to join its economics faculty. He agreed, provided the university help him develop his ideas about production. Harvard gave him a research assistant and a $2,000 grant to develop the system of input-output analysis that the world was to adopt. He and his assistant began constructing a table covering 42 American industries, taking months to compile figures and perform calculations that computers would latter handle in fractions of seconds.

During the war, he helped the United States Government with planning for industrial production, worked as a consultant to the Office of Strategic Services and supervised compilation of a 92-economic-sector table for the Department of Labor. In 1948, Mr. Leontief set up the Harvard Research Project on the Structure of the American Economy with the aid of large grants from the Ford and Rockefeller Foundations and the Air Force to expand and refine his input-output models. Soon he had a staff of 20 — and a 650-punch-card computer from I.B.M., then the state-of-the art.

He did not, however, keep the Air Force grant long once the Eisenhower Administration came to power; some of its officials were critical of his input-output theory as smacking too much of a planned economy. That was precisely what he thought it should smack of.

One of his goals in studying the nature of changes in industrial production was to enable nations to plan in ways that would be economically beneficial and help them avoid periods of economic hardship. But to some economists the idea of national economic planning was ill advised: not only would it not work, they said, but it might make matters worse and also might open the door to excessive Government control. They maintained it would be better to let the private sector and the free market determine the course of future economic events.

To Mr. Leontief, it seemed short-sighted for nations to devote little or no thought to the analysis of the future of the overall economy, especially after what he regarded as the effective work of modern economists in devising projections that are mathematically and statistically sound. He spoke out often on the subject in the 1970’s and 80’s.

He and Leonard Woodcock, then president of the United Auto Workers, proposed that the Federal Government establish an Office of National Economic Planning to help coordinate economic projects and make recommendations on policies they said could avert unnecessary unemployment, inflation, failures in health care, shortages in affordable housing, energy, public transportation and other requirements of a civilized society.

The idea never materialized. If anything, the generation of younger economists who followed him, many of whom he taught, developed less respect for the abilities of national Governments to plan for the long term. It bothered him greatly that toward the end of the century many Americans seemed to have lost broad faith in their Government’s ability to improve the lot of its citizens, particularly through economic programs.

In an Op-Ed article in The New York Times in 1992, he said there was little doubt that the United States Government had played an important role in a generally prosperous economy for more than half the century, from ending the Great Depression in the 30’s to guiding the nation through most of the rest of the century in generally sounder economic health than most of the rest of the world.

Mr. Leontief was always fearful that employment problems would accompany widespread use of the high-speed computers that he himself relied on almost from the moment they first became applicable for nonmilitary purposes after World War II. He warned that computers would be for many workers what the tractor was to the horse — great for the farmer but not great for the horse.

In an interview in 1996, when he was 90, Mr. Leontief, noting the trend toward corporate downsizing, said: ”Individual entrepreneurs will continue to do better and better and better, but significant segments of the work force will do worse and worse. Ultimately, Governments will have to play a role in arbitrating and correcting this.”

Mr. Leontief seemed to grow more liberal with age. During the student protests on the Harvard campus in 1969, he split with most senior faculty members and joined with a younger group more sympathetic to the protesting students. In 1975, he resigned from Harvard, where he was the Henry Lee Professor of Economics and chairman of the university’s Society of Fellows, its most distinguished group of scholars. He left a year ahead of schedule, complaining that too often teachers at the graduate level did not teach and researchers did not do research.

Shortly before he resigned, he joined an internal report criticizing Harvard’s economics department, which had long been regarded as among the world’s best. The report said that the department had failed to adequately recruit minority faculty members, that it took an overly narrow approach in scholarship and that a ”deterioration in attitudes and relationships” had occurred.

At N.Y.U., he continued to expand his work on input-output analysis and helped foreign nations adopt it. China was among the last to do so, as it intensified its industrialization in the late 1980’s.

Wassily Leontief, a balletomane and connoisseur of fine wines, said he also thought of himself as a squire of Willoughby Brook in northern Vermont, where he and his family had a summer home. It was all very well to be an internationally regarded scholar, but landing a beautiful brook trout, he would say with his sly smile, was his passion.

He is survived by his wife, Estelle Helena Marks, a writer, whom he married in 1932, his daughter, Svetlana Alpers, the art historian, author, and professor of fine arts at the University of California at Berkeley, and two grandsons.

 

 

Please see my related posts

Classical roots of Interdependence in Economics

George Dantzig and History of Linear Programming

 

 

 

Key Sources of Research:

 

 

STRUCTURE OF THE WORLD ECONOMY

Outline of a Simple Input-Output Formulation*

Nobel Memorial Lecture, December 11, 1973
WASSILY LEONTIEF

 

Click to access b541e3fec34aa38c09c9eec41a46981e8fb9.pdf

https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1973/leontief-lecture.html

 

 

 

 

How is the global economy interconnected?

https://www.ubs.com/microsites/together/en/nobel-perspectives/laureates/wassily-leontief.html

 

 

 

 

Wassily Leontief

Concise Encyclopedia of Economics

Wassily Leontief

http://www.econlib.org/library/Enc/bios/Leontief.html

 

 

 

 

Wassily Leontief and the discovery of the input output approach,

Bjerkholt, Olav

(2016) :

Memorandum, Department of Economics, University of Oslo, No. 18/2016

Click to access 877412162.pdf

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2884686

 

 

 

Wassily Leontief and Léon Walras: The Production as a Circular Flow

 

Amanar AKHABBAR*
Jérôme LALLEMENT

2011

Click to access Wassily-Leontief-and-Leon-Walras-the-Production-as-a-Circular-Flow.pdf

Click to access MPRA_paper_30207.pdf

 

 

 

Wassily Leontief, the Input-Output model, the Soviet National Economic Balance
and the General Equilibrium Theory

Fidel Aroche

 

Click to access Ponencia_Aroche_Fidel_1.pdf

 

 

 

 

Wassily Leontief: In appreciation

William J. Baumol and Thijs ten Raa

Euro. J. History of Economic Thought 16:3 511–522

September 2009

 

Click to access leontief%20ejhet.pdf

Click to access Thijs.pdf

 

 

 

 

Social Technology and Political Economy:  The debate about the Soviet origins of Input Output Analysis

Amanar Akhabbar

2006

Click to access 2006-12-21_Akhabbar.pdf

 

 

 

 

 

The National Accounts as a Tool for Analysis and Policy; History, Economic
Theory and Data Compilation Issues

Frits Bos
2009

Click to access MPRA_paper_23582.pdf

Click to access The-National-Accounts-as-a-Tool-for-Analysis-and-Policy-History-Economic-Theory-and-Compilation-Issues.pdf

 

 

 

 

The national accounts as a tool for analysis and policy; past, present and
future

Frits Bos

CPB Netherlands Bureau for Economic Policy Analysis
2006

Click to access MPRA_paper_1235.pdf

 

 

 

 

Three centuries of macro-economic statistics

Frits Bos

December 2011

Click to access MPRA_paper_35391.pdf

 

 

 

 

Wassily Leontief and His Contributions to Economic Accounting

BEA

1999

Click to access 0399leon.pdf

 

 

 

 

A Review of Input-Output Analysis

CARL F. CHRiST

Volume Title: Input-Output Analysis: An Appraisal
Volume ISBN: 0-870-14173-2

Click to access c2866.pdf

 

 

STRUCTURE OF THE WORLD ECONOMY
Outline of a Simple Input-Output Formulation

Nobel Memorial Lecture, December 11, 1973
by
WA S S I L Y LE O N T I E F

Harvard University, Cambridge, Massachusetts, USA.

Click to access b541e3fec34aa38c09c9eec41a46981e8fb9.pdf

 

 

 

 

 

THE INPUT-OUTPUT MODELING APPROACH TO THE NATIONAL
ECONOMY

Viorel GAFTEA

Click to access rjef2_2013p211-222.pdf

 

 

 

 

“Input-Output Analysis in an Increasingly Globalised World:
Applications of OECD’s Harmonised International Tables”,

 

Wixted, B., N. Yamano and C. Webb

(2006),

OECD Science, Technology and Industry Working Papers,
2006/07, OECD Publishing

Click to access input-output-analysis.pdf

 

 

 

 

 

System Dynamics and Input Output Analysis

Charles Braden

Click to access brade166.pdf

 

 

 

 

ECONOMIC INTERDEPENDENCE AND INPUT-OUTPUT THEORY

Ángel Luis Ruiz
Inter American University of Puerto Rico
Pedro F. Pellet
Nova Southeastern University

 

Click to access archivo5_vol5_no2.pdf

 

 

 

Leontief and the Future of the World Economy

Emilio Fontela

Catedrático Emérito

Universidad de Ginebra

2002

Click to access FIIRS006.PDF

 

 

 

Classical’ Roots of Input-Output Analysis: A Short Account of its Long Prehistory

By Heinz D. Kurz and Neri Salvadori

 

Click to access Kurz&Salvarodi_IOsClassicalRoots.pdf

 

 

 

 

EDITORIAL: CARBON FOOTPRINT AND INPUT–OUTPUT ANALYSIS – AN INTRODUCTION,

Thomas Wiedmann

(2009)

Economic Systems Research, 21:3, 175-186

Click to access Wiedman2009_Carbon_footprint_MRIO_introduction_ESR.pdf

 

 

 

Introduction: the History of Input–Output Analysis, Leontief’s Path and
Alternative Tracks

OLAV BJERKHOLT & HEINZ D. KURZ

Economic Systems Research
Vol. 18, No. 4, 331–333, December 2006

Click to access 2006_The_History_of_Input_Output_Analysis__Leonthiefs_Path_and_Alternative_Tracks__in_Economic_Systems_Research_.pdf

 

 

 

 

Sraffa, Leontief, Lange: The political economy of input–output economics

 

2017

https://www.sciencedirect.com/science/article/pii/S1517758016301035

 

 

 

 

 

USA and China: What are Trade in Value Added (TiVA) Balances

USA and China: What are Trade in Value Added (TiVA) Balances

 

Changes in Global Trade

  • Global Value Chains
  • Production Fragmentation
  • Vertical Specialization
  • Value added content of Trade

 

FROM INTERCONNECTED ECONOMIES : BENEFITING FROM INDUSTRY GLOBALISATION

TIVA4TIVA5

 

From Domestic Value Added in Chinese Exports

 

TIVA12

 

From Measurement and Determinants of Trade in Value Added

 

TIVA11

 

From OECD WTO TIVA

TIVA13

 

Ongoing TiVA Projects

  • OECD TIVA Initiative
  • EU FIGARO Initiative
  • NA TIVA Initiative
  • APEC TiVA Initiative

 

There is also OECD TiVA – MNE Project which incorporates Intra Firm trade of MNEs.

 

From An Overview on the Construction of North American Regional Supply-Use and Input-Output Tables and their Applications in Policy Analysis

Introduction

Trade-in-Value Added (TiVA) is a statistical approach used to measure the interconnectivity and marginal contribution in production of participating economies in global value chains (GVCs) (Degain and Maurer, 2015). The advantage of TiVA over traditional trade statistics is that TiVA measures trade flows consistent with internationally, vertically integrated global production networks, often called GVCs. TiVA statistics allow us to better analyze three aspects of international trade: measuring the contribution of domestic versus foreign intermediates in the exports, tracing production across countries to their final destination, and finally quantifying how individual industries contribute to producing exports (Lewis, 2013).

TiVA statistics allow us to map and quantify the interdependencies between industries and economies, and help us develop better estimates of the contribution from each country in the production processes and, consequently, better measure the impact from GVC engagement for domestic economies. However, it is necessary to highlight the underlying compilation methodology of TiVA in order to better understand the characteristics, scope and interpretation of TiVA. Hence, it is important to remember that TiVA statistics are estimated statistics that are derived, in part, from official statistics. TiVA statistics are meant to complement but not to replace official statistics.

Measuring trade flows in value added as opposed to gross value of trade flows has become increasingly important as the influence that GVCs has on international trade continues to rise. (Johnson, 2014; Ahmad and Ribarsky, 2014). The proliferation of GVCs means that production has become increasingly fragmented and vertically integrated across countries (Jones and Kierzkowski, 1988; Hummels, Ishii, and Yi, 2001; OECD, 2013). At the micro level, this means that many firms in disparate countries are interconnected. Across international borders, these firms take part in particular stages of the production process, together forming a global supply chain. As a result, intermediate inputs may cross international borders several times before being used to produce final consumable goods. This matters for several reasons. First, when goods cross multiple borders multiple times, they are exposed to more trade costs, which accumulate and compound before the goods are sold for final consumption. Additionally, traditional gross trade flows are overstated because gross trade flows may count intermediates multiple times. Relatedly, gross trade flows obscure the marginal contributions of countries along GVCs. TiVA measures the flows related to the value that is added at each stage of production by each country and maps from where value is created, where it is exported, and how it is used, as final consumption or as an input for future exports. How we understand gains from trade from trade flows is fundamental, and value-added approaches lead to better understanding of GVCs and their role in international trade.

There are two ways to capture TiVA. The first method is a direct approach, which decomposes existing data on trade statistics. Johnson (2012) introduce a TiVA indicator using value-added to output ratios from the source country to compute the value-added associated with the implicit output transfer to each destination. Koopman, Wang, and Wei (2014) build on the literature in vertical specialization (e.g. Hummels, Ishii, and Yi 2001) and the literature on TiVA (e.g. Johnson and Noguera, 2012; Daudin, Rifflart, and Schweisguth, 2011) to implement a complete decomposition of a country’s gross exports by value added components. This work has evolved into a second, indirect method of capturing TiVA. The indirect method is employed in the regional North American supply-use table (NASUT) and the regional North American inter-country input-output table (NAIOT). Estimating TiVA this way relies on national and international input-output tables as well as bilateral trade statistics to derive the international intermediate and final supply-demand matrices. These matrices reveal the origin and use of goods and services produced and exchanged among the countries and industries within the table domain. Other major international input-output tables include the Asian International Input-Output (AIO) Tables published by the Institute of Developing Economies Japan External Trade Organization (IDE-JETRO), the Inter-Country Input-Output (ICIO) Tables published by the OECD, the World Input-Output Tables (WIOT) published by the World Input-Output Database (WIOD) project, and the Eora Multi-region Input-Output Database (Eora MRIO).

The studies based on the above two approaches have revealed a trend of rising foreign value-added content in international trade flows and the resulting implications for trade policies. Johnson and Noguera (2016) find that value-added exports are falling relative to gross exports, which means that double-counting is increasingly more common in trade flows. This is consistent with increased GVC activity. Hummels, Ishii, and Yi (2001) show that vertical specialization has grown about 30 percent and accounts for about one-third of the growth in trade from about 1970 to 1990.

In recent years, more than half of global manufacturing imports are intermediate goods and more than 70 percent of global services imports are intermediate services (OECD, 2013). This is relevant because tariffs (and other trade costs) have a higher impact on the cost of GVC activity. Each time an intermediate input crosses an international border as part of the production process, the input incurs trade costs. As first observed by Yi (2003), trade costs are compounded when intermediate goods cross borders multiple times to complete the production process. Rouzet and Miroudot (2013) demonstrate that small tariffs can add up to a significant sum by the time a finished product reaches its consumers. Other trade costs such as non-tariff measures also have such accumulative effect on downstream products.

What the literature indicates the trends in GVCs mean for trade flows, generally, are two-fold. First, with the growth of GVC activity, gross value of trade flows will continue to be larger than the value of final goods that cross borders. Second, trade policy designed with respect to gross trade flows could have the potential to be overly restrictive or even impose costs indirectly on domestic production. Trade-in-Value Added thus provides a supplementary, relevant reference for evaluating the economic effect of trade policies.

In this paper, we introduce the North American Trade-in-Value Added (NA-TiVA) project, a trilateral, multiyear initiative that aims to produce a regional TiVA database that maps the value chains connecting Canada, the United States, and Mexico. Furthermore, we introduce and discuss the project’s deliverables, the agencies involved, how the NA-TiVA project complements other ongoing TiVA initiatives around the world, the technical framework for producing a regional inter-country input-output table for the NA region, and the value of this work to resolving open policy questions within international trade.

Ongoing TiVA Initiatives

Currently there are three major ongoing global and regional TiVA projects that are related to the North America TiVA project. They are the World Input-Output database (WIOD), OECD-WTO TiVA, and APEC TiVA initiatives.

The World Input-Output database (WIOD): The official WIOD project ran from May 1, 2009 to May 1, 2012, as a joint effort of eleven European research institutions. It was funded by the European Commission. Under the official WIOD project, the accounting framework and methodologies of constructing the TiVA databases, as well as the first version of the World Input-Output database were developed. The database was officially launched in April 2012. Since then, two additional versions of WIOD databases, namely the 2013 and 2016 Releases, were published. The 2016 Released database covers 28 EU countries and 15 other major economies in the world for years 2000-2014 with 56 industries.

The OECD-WTO TiVA database: The Organization for Economic Cooperate and Development (OECD) and World Trade Organization (WTO) undertook a joint initiative on TiVA in 2013. Since then, two versions of TiVA databases have been released (2013 and 2015 release). The 2015 release of OECD-WTO TiVA database covers 61 countries and 13 regions, with 34 industries, for years 1995, 2000, 2005, 2008-2011.

APEC TiVA initiative: In 2014, APEC economic leaders endorsed the APEC TiVA database initiative, a four-year project co-led by China and the United States. Under this project, an APEC TiVA database would be constructed by the end of 2018, covering 21 APEC economies.

Each of these three major global and regional TiVA initiatives include Canada, Mexico, and the United States. In the light of this, why is there still a need for constructing the NA TiVA database? What kind of additional value can the NA TiVA project bring to this global and regional network of TiVA initiatives?

The NA-TiVA project was motivated by regional statistical developments and continuous improvements in compiling TiVA databases. The 2003 Mexican input-output table distinguishes trade flows by domestic producers and production undertaken in Maquiladoras, a tax-free, tariff-free special processing zone, which allowed the estimates of separate production coefficients and thus TiVA measures for these two distinctive zones in Mexico (Koopman, Powers, Wang, and Wei, 2010; De la Cruz, Koopman, Wang, and Wei, 2011). The government of Canada further highlighted the importance and relevance of global value chains in the publication of a book assessing the impact and implication of GVCs (Foreign Affairs and International Trade Canada, 2011); and as of the 2015 edition of the OECD’s ICIO tables, Mexico is broken out as Mexico Global Manufacturers and Mexico Non-Global Manufacturers. This NA TiVA project builds off of these developments.

Constructing inter-country input-output tables, or so called TiVA databases, requires the harmonization of national supply-use tables (SUTs) or input-output tables (IOTs) as well as bilateral trade statistics from different countries. However, the data produced by countries often vary greatly in the level of detail and differ in industry and product classifications. Thus, the more countries are included in a global or regional TiVA project, the higher level of aggregation would be required for the purpose of harmonization. With only three countries involved, it is feasible for the NA TiVA database to include more products and sectors than other global and regional TiVA projects.

Moreover, other factors, such as all three countries adopt the same industry and product classifications (e.g. using the North American Industry Classification System (NAICS)), and produce SUTS at similarly detailed levels, would ensure the compatibility of data components, and thus lead to better quality of the resulting NA TiVA database.

Finally, the NA TiVA project could synthesize the ongoing trilateral trade statistics reconciliation effort and produce better-quality balanced bilateral trade data to feed into other global and regional TiVA initiatives. One of the key inputs for constructing TiVA databases is balanced bilateral trade statistics. However, countries rarely report symmetric bilateral trade statisticsone country’s reported exports rarely equals its trading partner’s reported imports, and vice versa. To reconcile such asymmetries to produce balanced bilateral trade statistics, joint effort by both trading countries is warranted, including investigating the causes of asymmetries at detailed product level and making corresponding adjustment mechanically. However, global and regional TiVA initiatives often have to consider an incredible number of country pairs, making such an elaborate reconciliation practice rather infeasible. Thus, global and regional TiVA initiatives often turn to economic modelling to balance bilateral trade statistics which could be applied in a systematic way to all countries. Although such approach can be mathematically sound, the resulting data often require additional scrutiny, validation, and adjustment, as they do not always reflect the reality accurately. Canada, Mexico, and the United States have ongoing bilateral trade reconciliation. This NA TiVA project provides additional motivation and framework for this effort.

The History, Scope, and Major Objectives of the NA TiVA Initiative

In October 2014, the representatives from the United States, Canada, and Mexico met and kicked off the idea of constructing the NA TiVA database at a UN conference in Mexico. The main objective of this project is to construct the NA TiVA database by 2021 covering three NA countries with more detailed industry and firm information, and to improve the quality of TiVA measures for the value chains in the NA region.

The NA-TiVA project involves eight government agencies across the three NA countries: for Canada, Statistics Canada (STATCAN) and Global Affairs Canada; for Mexico, Instituto Nacional de Estadística y Geografía (INEGI) and Banco de Mexico; and for the United States, the Bureau of Economic Analysis (BEA), the U.S. Census Bureau (CENSUS), the U.S. International Trade Commission (USITC), and the Office of the U.S. Trade Representative (USTR).

In addition, because the resulting NA-TiVA database would be eventually integrated into the OECD-WTO TiVA database to improve the quality of information on the North American region, participants of the NA-TiVA project regularly meet with OECD representatives to harmonize TiVA database compilation methodologies, exchange data to synthesize the effort and ensure consistency across countries, and discuss best practices. Other international organizations, such as United Nations Statistics Division (UNSD), and WTO, are often consulted as well for national account and trade statistics related issues.

Under the NA-TiVA initiative, three parallel work streams have been established: The trade in goods and services reconciliation team, which is tasked to produce balanced bilateral trade statistics for goods and services; the SUT team, whose goal is to harmonize the national SUTs and compile the regional NASUTs and NAIOTs; and the White Paper team, the goal of which is to produce documentation that outlines the conceptual methodology, identifies major technical issues, describes policy applications of a NA-TiVA initiative, and details project outputs as well as future work.

FROM INTERCONNECTED ECONOMIES :BENEFITING FROM INDUSTRY GLOBALISATION

 

TIVA6

 

 

From Supply-Use Tables, Trade-in-Value-Added Initiatives, and their Applications

TIVATIVA2TIVA3

Please see my related posts:

Understanding Global Value Chains – G20/OECD/WB Initiative

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

Development of Global Trade and Production Accounts: UN SEIGA Initiative

Trends in Intra Firm Trade of USA

Understanding Trade in Intermediate Goods

Intra Industry Trade and International Production and Distribution Networks

Production Chain Length and Boundary Crossings in Global Value Chains

 

Key Sources of Research:

The U.S.-China Bilateral Balance In Trade In Value Added

2017

https://seekingalpha.com/article/4048166-u-s-china-bilateral-balance-trade-value-added

 

 

 

 

Understanding the US-China Trade Relationship

Prepared for the US-China Business Council By Oxford Economics

January 2017

 

Click to access OE%20US%20Jobs%20and%20China%20Trade%20Report.pdf

 

 

 

Implications and Interpretations of Value-Added Trade Balances

John B. Benedetto

2012

 

Click to access implicationsand.pdf

 

 

The U.S.–China trade deficit—a value-added perspective

Demetrio Scopelliti

BLS

2013

Click to access u-s-china-trade-deficit.pdf

 

 

 

The value-added content of trade

Robert Johnson, Guillermo Noguera

07 June 2011

 

https://voxeu.org/article/value-added-content-trade-new-insights-us-china-imbalance

 

 

 

Trade in Value-Added

December 3, 2013

Logan Lewis

 

https://www.federalreserve.gov/econresdata/notes/ifdp-notes/2013/trade-in-value-added-20131203.html

 

 

 

 

China-U.S. Trade Issues

Wayne M. Morrison

Specialist in Asian Trade and Finance
April 2, 2018

FAS

Click to access RL33536.pdf

 

 

 

The China Shock revisited: Insights from value added trade flows

Adam Jakubiky Victor Kummritzz

June 30, 2017

Click to access jk_draft.pdf

 

 

 

 

Measurement and Determinants of Trade in Value Added

Nakgyoon Choi

2013

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2317706

 

 

 

 

OECD-WTO: Statistics on Trade in Value Added

OECD

https://www.oecd-ilibrary.org/trade/data/oecd-wto-statistics-on-trade-in-value-added_data-00648-en

 

 

 

 

NAFTA, VALUE ADDED AND TRADE-IN-TASKS

Antonio Rodriguez-Lopez

Click to access nafta-essays-rodriguez-lopez.pdf

 

 

 

Trade in Value Added and the Value Added in Trade

Robert Stehrer

Click to access Stehrer_background_2.pdf

 

 

 

 

US Trade Wars with Emerging Countries in the 21st Century: Make America and Its Partners Lose Again

Antoine Bouët (International Food Policy Research Institute, Washington, D.C., and Groupe de Recherche en Économie Théorique et Appliquée [GREThA], University of Bordeaux, France)
David Laborde (International Food Policy Research Institute)

2017

Click to access article_us_tradewars_bouet_laborde_2017.pdf

 

 

 

Measuring Value Added in the People’s Republic of China’s Exports: A Direct Approach.

Xing, Y.

2014.

ADBI Working Paper 493. Tokyo: Asian Development Bank Institute

Click to access adbi-wp493.pdf

 

 

 

 

International Trade Costs, Global Supply Chains and Value-added Trade in
Australia

Gerard Kelly and Gianni La Cava
RDP 2014-07

 

Click to access rdp2014-07.pdf

 

 

 

Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera,
Accounting for Intermediates: Production Sharing and Trade in Value Added

 

Masaaki Kuboniwa
January, 2014

 

Click to access DP598.pdf

 

 

 

 

How iPhone Widens the US Trade Deficits with PRC

Yuqing Xing
And
Neal Detert

Nov 2010

Click to access 10-21.pdf

 

 

 

 

Trade in value added (TIVA)

2012

Click to access trade-in-value-added-2012.pdf

 

 

Global Value Chains (GVCs)

OECD

http://www.oecd.org/sti/ind/global-value-chains.htm

 

 

 

INTERCONNECTED ECONOMIES: BENEFITING FROM GLOBAL VALUE CHAINS

SYNTHESIS REPORT

OECD

Click to access interconnected-economies-GVCs-synthesis.pdf

 

 

 

TRACING THE VALUE ADDED IN GLOBAL VALUE CHAINS:
PRODUCT-LEVEL CASE STUDIES IN CHINA

UNCTAD

Click to access ditctncd2015d1_en.pdf

 

 

 

 

The Growth of Chinese Exports:
An Examination of the Detailed Trade Data

Brett Berger
Robert F. Martin

US Federal Reserve

Click to access ifdp1033.pdf

 

 

 

 

Comparing Trade Performance of China and India

Sarah Y TONG

Click to access Vol1No1_SarahTong.pdf

 

 

 

 

Trade in Value Added : China

OECD WTO

2015

Click to access CN_2015_China.pdf

 

 

 

Value-Added Trade and Its Implications for International Trade Policy

Kemal Derviş, Joshua P. Meltzer, and Karim Foda

https://www.brookings.edu/opinions/value-added-trade-and-its-implications-for-international-trade-policy/

 

 

 

 

Bilateral Trade Balances with China: A Matter of Accounting

Submitted by Dana Vorisek

co-authors: Tianli Zhao

On Thu, 02/05/2015

http://blogs.worldbank.org/prospects/bilateral-trade-balances-china-matter-accounting

 

 

 

Value-Added Exports and U.S. Local Labor Markets:
Does China Really Matter?

Leilei Sheny
Peri Silvaz

WTO

August 2017

Click to access silva_e.pdf

 

 

 

HOW MUCH OF CHINESE EXPORTS IS REALLY MADE IN CHINA? ASSESSING
DOMESTIC VALUE-ADDED WHEN PROCESSING TRADE IS PERVASIVE

 

Robert Koopman
Zhi Wang
Shang-Jin Wei

NBER

June 2008

Click to access w14109.pdf

 

 

 

 

GIVE CREDIT WHERE CREDIT IS DUE:
TRACING VALUE ADDED IN GLOBAL PRODUCTION CHAINS

Robert Koopman
William Powers
Zhi Wang
Shang-Jin Wei

September 2010

Click to access w16426.pdf

 

 

 

SPIDERS AND SNAKES:
OFFSHORING AND AGGLOMERATION IN THE GLOBAL ECONOMY

Richard Baldwin
Anthony Venables

December 2010

Click to access w16611.pdf

 

 

 

TRADING TASKS: A SIMPLE THEORY OF OFFSHORING

Gene M. Grossman
Esteban Rossi-Hansberg

December 2006

http://www.nber.org/papers/w12721

 

 

 

 

PRODUCTION CHAINS

David K. Levine

December 2010

Click to access w16571.pdf

 

 

 

AN ELEMENTARY THEORY OF GLOBAL SUPPLY CHAINS

Arnaud Costinot
Jonathan Vogel
Su Wang

April 2011

Click to access w16936.pdf

 

 

 

TRADE-IN-GOODS AND TRADE-IN-TASKS:
AN INTEGRATING FRAMEWORK

Richard Baldwin
Frédéric Robert-Nicoud

April 2010

Click to access w15882.pdf

 

 

Measurement of Trade in Value-Added: using Chinese Input-output Tables
Capturing Processing Trade

Yang Cuihong1, Chen Xikang1, Duan Yuwan1, Jiang Xuemei1, Pei Jiansuo3, Xu Jian2,
Yang Lianling1, Zhu Kunfu1

 

Click to access STS024-P3-S.pdf

 

 

 

Adjusted China-US Trade Balance

Lawrence J. Lau, Xikang Chen and Yanyan Xiong

March 2017

Click to access igef%20working%20paper%20no.%2054%20english%20version.pdf

 

 

 

Domestic Value Added in Chinese Exports

Hiau Looi Kee and Heiwai Tang

World Bank and Tufts University
December 2011

Click to access session2-tang-presentation.pdf

 

 

 

NETWORKS OF VALUE ADDED TRADE

2015
João Amador | Sónia Cabral

Bank of Portugal

Click to access wp201516.pdf

 

 

 

 

Processing Trade, Exchange Rates and China’s Bilateral Trade Balances

Yuqing Xing

Jan 2011

 

Click to access 10-30.pdf

 

 

 

Trade in Value Added
WTO TiVA Profiles

Regional Workshop on
International Merchandise Trade Statistics
11-13 September 2017
Suzhou, China

UNSD

Click to access Agenda%20item%2019%20(c)%20-%20WTO.pdf

 

 

 

 

FRAGMENTATION AND TRADE IN VALUE ADDED OVER FOUR DECADES

Robert C. Johnson
Guillermo Noguera

June 2012

Click to access w18186.pdf

 

 

 

 

TRACING VALUE-ADDED AND DOUBLE COUNTING IN GROSS EXPORTS

Robert Koopman
Zhi Wang
Shang-Jin Wei

November 2012

Click to access w18579.pdf

 

 

 

 

ORGANIZING THE GLOBAL VALUE CHAIN

Pol Antràs
Davin Chor

June 2012

 

Click to access w18163.pdf

 

 

 

 

OFFSHORING: GENERAL EQUILIBRIUM EFFECTS ON WAGES, PRODUCTION
AND TRADE

Richard Baldwin
Frederic Robert-Nicoud

March 2007

 

Click to access w12991.pdf

 

 

 

 

TRADING TASKS: A SIMPLE THEORY OF OFFSHORING

Gene M. Grossman
Esteban Rossi-Hansberg

December 2006

Click to access w12721.pdf

 

 

 

 

Trade in Value Added: Developing New Measures of Cross-Border Trade

World Bank

2013

Click to access 786210PUB0REPL00Box377348B00PUBLIC0.pdf

 

 

 

 

Trade in Value Added

Maria Borga Jiemin Guo

BEA Advisory Committee

May 10, 2013

 

Click to access 0613_borga_guo_trade_in_value.pdf

 

 

 

 

Trade in value added Concepts, applications and challenges

Training Workshop on Trade in Services Negotiations for AU-CFTA Negotiators
Nairobi, Kenya

WTO

Click to access ditc-ted-Nairobi-24082015-WTO-liberatore-2.pdf

 

 

 

Trade in Value-Added: I-O approach and the domestic content of exports

UNSD

 

https://unstats.un.org/unsd/trade/globalforum/trade-value-added.asp

 

 

 

 

TRADE IN VALUE-ADDED: WTO-OECD DATABASE

Courtesy of Sébastien Miroudot (OECD)

UNESCAP

Click to access cbtr9-sebastien.pdf

 

 

 

 

TRADE IN VALUE-ADDED: CONCEPTS, METHODOLOGIES AND CHALLENGES
(JOINT OECD-WTO NOTE)

OECD WTO

Click to access 49894138.pdf

 

 

 

 

Trade in Value Added and the Value Added in Trade

WIOD

Working Paper Number: 8
Author: Robert Stehrer

Click to access wiod8.pdf

 

 

 

Measuring Trade in Value-Added

Draft Chapter 9

Meeting of Group of Experts on National Accounts –
Interim meeting on Global Production
Geneva, 3-4 April 2013

Click to access Working_Paper_9.pdf

 

 

 

Trade in Value Added: The Challenge of International Trade Statistics
With an Empirical Study on Trade in Norway and the Netherlands 2000-2012

Ida Helene Berg

https://www.duo.uio.no/bitstream/handle/10852/40975/BergIdaHelene.pdf?sequence=9

 

 

 

Trade in Value-Added and Comparative Advantage

DrRadford Schantz

25thINFORUM Conference
Riga

August 28-September 2, 2017

Click to access usa_schantz_2017_slides.pdf

 

 

 

Trade in Value Added: An East Asian Perspective.

Inomata, S.

2013.

ADBI Working Paper 451. Tokyo: Asian Development Bank Institute.

Click to access adbi-wp451.pdf

 

 

 

 

Global Value Chains and Trade in Value-Added: New Insights, Better Policies

Ken Ash

March 2013

 

https://www.worldeconomics.com/papers/Global%20Value%20Chains%20and%20Trade%20in%20ValueAdded_f7fe83a3-ec02-4180-9b02-04d1d85bb59a.paper

 

 

 

OECD WORK ON GLOBAL VALUE CHAINS AND TRADE IN VALUE ADDED

Koen De Backer

2013

Click to access 130627_de_backer.pdf

 

 

 

 

The Value-added Structure of Gross Exports and Global Production Network

Robert Koopman and Zhi Wang
United States International Trade Commission

Shang-Jin Wei, Columbia University, CEPR and NBER

Click to access 5839.pdf

 

 

 

Singapore’s Trade in Value Added:
Importance and Implication of Information from the OCED-WTO TiVA Database

Mun–Heng TOH

 

Click to access 2582_20160412091_Singapore_TiVA.pdf

 

 

 

 

Value added and participation in Global Value Chains:
the case of Spain

Marta Solaz
Universitat de Valencia

Fourth World KLEMS Conference, 23-24 May 2016

Click to access worldklems2016_Solaz_slides.pdf

 

 

 

 

Trade in Value Added (TiVA): December 2016

OECD

https://stats.oecd.org/index.aspx?queryid=75537

 

 

 

 

An Overview on the Construction of North American Regional Supply-Use and Input-Output Tables and their Applications in Policy Analysis

Statistics Canada
Anthony Peluso
U.S. Bureau of Economic Analysis
Gabriel Medeiros
Jeffrey Young
U.S. International Trade Commission
Ross J. Hallren
Lin Jones
Richard Nugent
Heather Wickramarachi

ECONOMICS WORKING PAPER SERIES
Working Paper 2017-12-A

Click to access ecwp-2017-12-a-12-12-17-as-pdf_0.pdf

 

 

 

 

C. The rise of global value chains

World Trade Report

2014

Click to access wtr14-2c_e.pdf

 

 

 

 

MEASURING VALUE IN GLOBAL VALUE CHAINS

Rashmi Banga

UNCTAD
May 2013

Click to access ecidc2013misc1_bp8.pdf

 

 

 

 

Highlights and Challenges of Measuring Global Production

Tom Howells
Federal Economic Statistics Advisory Committee
Suitland Federal Center

June 9, 2017

Click to access Howells-Presentation.pdf

 

 

 

 

Value added trade: A tale of two concepts

Robert Stehrer

The Vienna Institute for International Economic Studies (wiiw)
Version: 2012-12-09

December 10-11, 2012 – CompNet workshop
ECB Frankfurt, Germany.

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.361.9428&rep=rep1&type=pdf

 

 

 

Summary Report of the Fifth Meeting of
APEC Technical Group of Measurement on TiVA under GVCs

August 2017

Click to access 20170901142536597.pdf

 

 

 

 

Trade in value added: do we need new measures of competitiveness?

Kirsten Lommatzsch, Maria Silgoner and Paul Ramskogler

2016

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1936.en.pdf?54d5d8210e9e26ed5bf65d4279223622

 

 

 

 

Who Faces the Risk of Collateral Damage from U.S. Tariffs?

wells Fargo

March 2018

Click to access collateral-damage-20180326.pdf

 

 

 

 

Supply-Use Tables, Trade-in-Value-Added Initiatives, and their Applications

William Powers

ADB Supply and Use Tables Validation Workshop

Bangkok, Thailand
30 June, 2016

https://wpqr4.adb.org/dm/atom/library/_Psut_RMain/document/_Psut_RPageLibrary48257E1F0010578E_D0819CE5DCD76117148257FE2002C81CC_ATiVA_5f2016_5fPowers.pdf/media

 

 

 

 

CHAPTER 13. APPLICATIONS OF EXTENDED SUPPLY AND USE TABLES:
CONSTRUCTING GLOBAL SUPPLY AND USE AND INPUT-OUTPUT TABLES

UNSD

 

Click to access Chapter%2013%20-%20Applications%20for%20Global%20Tables.pdf

 

 

 

 

APEC: Trade in Value Added under Global Value Chains

Erich H. Strassner

2ndStatistics Conference “Measuring the Economy in a Globalized World”
Santiago, Chile
3-4 October 2017

http://www.bcentral.cl/documents/20143/926189/4.2.%28Strassner%29.pdf/d18bab8d-2331-3af2-fcc5-e877c1722880

 

 

 

CURRENT DEVELOPMENTS AND FUTURE EXPANSIONS OF
TRADE IN VALUE-ADDED PROJECT IN OECD

Norihiko YAMANO

2016

Click to access current_developments_trade_valueadded_yamano.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States:A Proof of Concept

Lin Z. Jones and ZhiWang (USITC)
James J. Fetzer, Thomas F. Howells III, Erich H. Strassner (BEA)

The Fourth World KLEMS Conference
Madrid, Spain
May 23-24, 2016

Click to access worldklems2016_Strassner_slides.pdf

 

 

 

 

 

Work Plan for the Technical Group for the Measurement of APEC TiVA Under GVCs
Purpose: Information

Submitted by: China, United States
First Committee on Trade and Investment Meeting
Clark, Philippines
3-4 February 2015

Click to access CONTENT50694276526.pdf

 

 

 

 

APEC in 2014

Click to access NewDirections-05apec.pdf

 

 

 

Global value chains and trade in value added

EUROSTAT

http://ec.europa.eu/eurostat/statistics-explained/index.php/Global_value_chains_and_trade_in_value_added

 

 

 

Services and Manufacturing : Patterns of Linkages

Expert Group Meeting on “Global Value Chains, Regional Integration and Sustainable Development: Asia-Pacific Perspectives”

12 Dec 2014 – UNESCAP, Bangkok

Click to access EGM-Session%203-Andre%20Wirjo.pdf

 

 

 

The 3rd Capacity Building Workshop on Strategic Framework on Measurement of APEC TiVA under GVCs and its Action Plan

APEC

2017

https://aimp2.apec.org/sites/PDB/Lists/Proposals/DispForm.aspx?ID=2012

 

 

 

 

Capacity Building Workshop on Strategic Framework on Measurement of APEC TiVA under GVCs and its Action Plan

APEC

2016

https://aimp2.apec.org/sites/PDB/Lists/Proposals/DispForm.aspx?ID=1831

 

 

 

 

Enhancing Value Chains An Agenda for APEC

CSIS

2013

Click to access EnhancingValueChains%20Report.pdf

 

 

 

Changing Patterns of Trade and Global Value Chains in Postcrisis Asia

Ganeshan Wignaraja

Juzhong Zhuang

Mahinthan J. Mariasingham

Madeline Dumaua-Cabauatan

2017

Click to access changing-patterns-trade-gvc.pdf

 

 

 

Global value chains in a changing world

Edited by Deborah K. Elms and Patrick Low

WTO

Click to access aid4tradeglobalvalue13_e.pdf

 

 

 

 

Trade in value added: Concepts, estimation and analysis,

Javorsek, Marko; Camacho, Ignacio

(2015) :

ARTNeT Working Paper Series, No. 150

Click to access 826594735.pdf

 

 

 

India’s Future in Asia: The APEC Opportunity

By Harsha V. Singh and Anubhav Gupta

 

Click to access ASPI_APEC_fullreport_online.pdf

 

 

 

Update on New Measurements of the Impacts of Globalization

James J. Fetzer and Thomas F. Howells III

Advisory Committee Meeting
Washington, DC
November 13, 2015

 

Click to access update-on-new-measurements-of-the-impacts-of-globalization.pdf

 

 

 

 

ASIA-PACIFIC
TRADE AND INVESTMENT REPORT 2016
Recent Trends and Developments

Shamshad Akhtar

Hongjoo Hahm

Susan F. Stone

Copyright © United Nations 2016

Click to access aptir-2016-full.pdf

 

 

 

 

Asia’s Rise in the
New World Trade Order
The Effects of Mega-Regional Trade Agreements on Asian Countries
Part 2 of the GED Study Series:
Effects of Mega-Regional Trade Agreements

 

Click to access NW_Asia_s_Rise_in_the_New_World_Trade_Order.pdf

 

 

 

The role of different types of firms in GVCs

GGDC 25th Anniversary Conference

 

Stephen Chong, Rutger Hoekstra, Oscar Lemmers, Ilke Van Beveren, Marcel van den Berg, Ron van der Wal, Piet Verbiest

Click to access presentation_lemmers.pdf

 

 

 

GLOBAL VALUE CHAINS AND SOUTH-SOUTH TRADE

UNCTAD

Click to access gdsecidc2015d1_en.pdf

 

 

 

 

Annex 5: Strategic Framework on Measurement of
APEC TiVA Under GVCs

APEC

Click to access 14_som2_049anx05.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States: A Proof of Concept

James J. Fetzer, Thomas F. Howells III, Lin Z. Jones, Erich H. Strassner, and Zhi Wang1

The Fourth World KLEMS Conference
Madrid, Spain
May 23-24, 2016

Click to access worldklems2016_Strassner.pdf

 

 

 

 “Participation of Developing Countries in Global Value Chains: Implications for Trade and Trade-Related Policies”

Kowalski, P. et al.

(2015),

OECD Trade Policy Papers, No. 179,
OECD Publishing, Paris

Click to access OECD_Trade_Policy_Papers_179.pdf

 

 

 

 

Complex Network Analysis for Characterizing Global Value Chains in Equipment Manufacturing.

Xiao H, Sun T, Meng B, Cheng L

(2017)

PLoS ONE 12(1):

Click to access pone.0169549.pdf

 

 

 

A Network of Networks Perspective on Global Trade.

Maluck J, Donner RV

(2015)

PLoS ONE 10(7)

Click to access pone.0133310.pdf

 

 

 

Trends of the World Input and Output Network of Global Trade.

del RõÂo-Chanona RM, Grujić J, Jeldtoft Jensen H

(2017)

PLoS ONE 12(1):

Click to access pone.0170817.pdf

 

 

 

World Input-Output Network.

Cerina F, Zhu Z, Chessa A, Riccaboni M

(2015)

PLoS ONE 10(7):

Click to access pone.0134025.pdf

 

 

 

FAQ on GVCs: some answers from the Global I-O tables approach

Rita Cappariello,

 

Click to access Rita-Cappariello.pdf

 

 

 

 

 

A Markovian model of evolving world input-output network.

Moosavi V, Isacchini G

(2017)

PLoS ONE 12(10):

Click to access pone.0186746.pdf

 

 

 

 

Hierarchicality of Trade Flow Networks Reveals Complexity of Products.

Shi P, Zhang J, Yang B, Luo J

(2014)

PLoS ONE 9(6):

Click to access pone.0098247.pdf

 

 

 

International Trade Modelling Using Open Flow Networks: A Flow-Distance Based Analysis.

Shen B, Zhang J, Li Y, Zheng Q, Li X
(2015)

PLoS ONE 10(11):

Click to access pone.0142936.pdf

 

 

 

THE EVOLVING GEOGRAPHY OF PRODUCTION HUBS AND REGIONAL VALUE CHAINS ACROSS EAST ASIA: TRADE IN VALUE-ADDED

G. Suder (Melbourne Business School), P. Liesch (UQ), S. Inomata (JETRO- IDE), I. Jormanainen (Aalto University) and B. Meng (JETRO- IDE and OECD),

For: Journal of World Business

 

https://minerva-access.unimelb.edu.au/bitstream/handle/11343/159095/The%20evolving%20geography%20of%20production%20hubs%20and%20regional%20value%20chains%20across%20East%20Asia-%20Trade%20in%20value-added.pdf?sequence=1&isAllowed=y

 

 

 

 

AN ICIO SPLIT ACCORDING TO DOMESTIC AND FOREIGN OWNERSHIP:
THE OECD TIVA-MNE PROJECT

Charles Cadestin, Koen De Backer, Isabelle Desnoyers-James,
Sébastien Miroudot, Davide Rigo and Ming Ye

OECD

2017

Click to access 2757_20170515071_Cadestin_et_al_2017_ICIO_split_ownership.pdf

 

 

 

 

THE FIGARO PROJECT: THE EU INTER-COUNTRY SUPPLY, USE AND INPUT-OUTPUT TABLES

 

Click to access 2504_20160519071_Item10-12_FIGAROproject.pdf

 

 

Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

James Fetzer and Erich H. Strassner

June 10, 2015

US BEA

 

Click to access identifying-heterogeneity-in-the-production-components-of-globally-engaged-business-enterprises-in-the-united-states.pdf

 

 

The EU Inter-country Supply, Use and Input-Output Tables (FIGARO Project): Recent progress

Prepared by Eurostat

2017

Click to access 3_-_FIGARO_project.pdf

 

 

Tracing value-added and double counting in sales of foreign affiliates and domestic-owned companies

Sebastien Miroudot and ming ye

Trade and Agriculture Directorate, OECD, Trade and Agriculture Directorate, OECD

14 March 2018

Click to access MPRA_paper_85723.pdf

 

Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

Prepared by Bureau of Economic Analysis, U.S. Department of Commerce

2015

 

Click to access 11_Identifying_Heterogeneity__US_.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States: A Proof of Concept (Draft)

Prepared by the United States

2017

 

Click to access 7_-_Estimating_Extended_Supply-Use_Tables_in_Basic_Prices.pdf

 

 

TIVA: CONSTRUCTING THE ICIO TABLE AND FUTURE WORK

 

Fabienne Fortanier (Head of Trade Statistics, OECD) Christophe Degain (Senior Statistician, WTO)

OECD

Click to access Session%2012_WTO-OECD%20SUT%20and%20ICIOT%20-%20Training%20module%20(ECA)%20-%20English%20Final.pdf

 

 

 

 

FIGARO
Full International and Global Accounts for Research in Input-
Output analysis
The EU Inter-country Supply, Use and Input-Output Tables

José M. Rueda-Cantuche

Isabelle Rémond-Tiedrez

Item 4, NAWG Meeting, Luxembourg, 11 May 2016

Click to access Item_4d_FIGARO_UNECE_new.pdf

 

 

 

OECD-WTO Trade in Value Added (TiVA) data: introduction

OECD

 

Click to access Session%2011_WTO-OECD%20TiVA%20intro%20-%20Training%20module%20(ECA)%20-%20English%20FINAL.pdf

 

 

 

Trade and Investment Linkages in Global Value Chains: Insights from the new TiVA-MNE Dataset

OECD

2016

 

Click to access trade-investment-linkages-in-gvc.pdf

 

 

INTERCONNECTED ECONOMIES:
BENEFITING FROM INDUSTRY GLOBALISATION

Dirk Pilat,

Global Industry and Economy Forum 2013:
Fostering Industrial Innovation through
Creativity
Seoul, 24 June 2013

 

 

Calculating Trade in Value Added

Prepared by Aqib Aslam, Natalija Novta, and Fabiano Rodrigues-Bastos1

July 2017

IMF

https://www.imf.org/~/media/Files/Publications/WP/2017/wp17178.ashx

 

Measuring Globalization: Global Multi Region Input Output Data Bases (G-MRIO)

Measuring Globalization: Global Multi Region Input Output Data Bases (G-MRIO)

 

A special issue of Economic Systems Research published in 2013 discussed currently available GMRIO data bases.  There are two strands of research in development and use of these databases:

  • Trade flows and global supply chains
  • Environmental Impacts of Economic Growth, Trade and Globalization

 

G-MRIO

  • IDE JETRO Asian IO Tables
  • EORA
  • OECD Inter-Country Input-Output (ICIO) tables
  • GRAM (Global Resource Accounting Model )
  • World Input-Output Database (WIOD).
  • Global Trade Analysis Project (GTAP)
  • EXIOPOL (EXIOBASE)

 

Another recent development is development of Trade in Value added databases analyzing trade flows of intermediate goods and fragmented global supply chains and production networks.  These projects are currently underway at the time of writing of this post.

TIVA Databases

  • NA TiVA Project
  • The OECD-WTO TiVA database
  • APEC TiVA initiative

 

There are also EE- GMRIO (Environmentally extended GMRIO) discussed else where in a related post.

 

GMRIO Databases

 

GRAM

The Global Resource Accounting Model (GRAM) is a multi-regional input-output model (MRIO), which currently distinguishes between 62 countries and one ‘rest of the world’ region and 48 industrial sectors per country or region. The heart of the model is made up of OECD data on bilateral trade flows and input-output tables for 1995 to 2010. Combined with additional data sets, such as CO2 emissions and material extraction, the model enables production-related variables to be attributed to end consumption.

 

 

GLOBAL MULTIREGIONAL INPUT–OUTPUT FRAMEWORKS: AN INTRODUCTION AND OUTLOOK

Arnold Tukker & Erik Dietzenbacher
Published online: 21 Mar 2013
This review is the introduction to a special issue of Economic Systems Research on the topic of global multi regional input–output (GMRIO) tables, models, and analysis. It provides a short historical context of GMRIO development and its applications (many of which deal with environmental extensions) and presents the rationale for the major database projects presented in this special issue. Then the six papers are briefly introduced. This is followed by a concluding comparison of the characteristics of the main GMRIO databases developed thus far and an outlook of potential further developments.

 

COMPILATION AND APPLICATIONS OF IDE-JETRO’S INTERNATIONAL INPUT–OUTPUT TABLES

Bo Meng , Yaxiong Zhang & Satoshi Inomata
Published online: 21 Mar 2013
International input–output (IO) tables are among the most useful tools for economic analysis. Since these tables provide detailed information about international production networks, they have recently attracted considerable attention in research on spatial economics, global value chains, and issues relating to trade in value added. The Institute of Developing Economies at the Japan External Trade Organization (IDE-JETRO) has more than 40 years of experience in the construction and analysis of international IO tables. This paper explains the development of IDE-JETRO’s multi-regional IO projects including the construction of the Asian International Input–Output table and the Transnational Inter regional Input–Output table between China and Japan. To help users understand the features of the tables, this paper also gives examples of their application.

 

 

EXIOPOL – DEVELOPMENT AND ILLUSTRATIVE ANALYSES OF A DETAILED GLOBAL MR EE SUT/IOT

Arnold Tukker , Arjan de Koning , Richard Wood , Troy Hawkins , Stephan Lutter , Jose
Published online: 21 Mar 2013
EXIOPOL (A New Environmental Accounting Framework Using Externality Data and Input–Output Tools for Policy Analysis) was a European Union (EU)-funded project creating a detailed, global, multi regional environmentally extended Supply and Use table (MR EE SUT) of 43 countries, 129 sectors, 80 resources, and 40 emissions. We sourced primary SUT and input–output tables from Eurostat and non-EU statistical offices. We harmonized and detailed them using auxiliary national accounts data and co-efficient matrices. Imports were allocated to countries of exports using United Nations Commodity Trade Statistics Database trade shares. Optimization procedures removed imbalances in these detailing and trade linking steps. Environmental extensions were added from various sources. We calculated the EU footprint of final consumption with resulting MR EE SUT. EU policies focus mainly on energy and carbon footprints. We show that the EU land, water, and material footprint abroad is much more relevant, and should be prioritized in the EU’s environmental product and trade policies.

 

 

A MULTI-REGION INPUT–OUTPUT TABLE BASED ON THE GLOBAL TRADE ANALYSIS PROJECT DATABASE (GTAP-MRIO)

Robbie M. Andrew & Glen P. Peters
Published online: 21 Mar 2013
Understanding the drivers of many environmental problems requires enumerating the global supply chain. Multi-region input–output analysis (MRIOA) is a well-established technique for this purpose, but constructing a multi-region input–output table (MRIOT) can be a formidable challenge. We constructed a large MRIOT using the Global Trade Analysis Project (GTAP) database of harmonised economic, IO, and trade data. We discuss the historical development of the GTAP-MRIO and describe its efficient construction. We provide updated carbon footprint estimates and analyse several issues relevant for MRIO construction and applications. We demonstrate that differences in environmental satellite accounts may be more important than differences in MRIOTs when calculating national carbon footprints. The GTAP-MRIO is a robust global MRIOT and, given its easy availability and implementation, it should allow the widespread application of global MRIOA by a variety of users.

 

 

THE CONSTRUCTION OF WORLD INPUT–OUTPUT TABLES IN THE WIOD PROJECT

Erik Dietzenbacher , Bart Los , Robert Stehrer , Marcel Timmer & Gaaitzen de Vries
Published online: 21 Mar 2013
This article describes the construction of the World Input–Output Tables (WIOTs) that constitute the core of the World Input–Output Database. WIOTs are available for the period 1995–2009 and give the values of transactions among 35 industries in 40 countries plus the ‘Rest of the World’ and from these industries to households, governments and users of capital goods in the same set of countries. The article describes how information from the National Accounts, Supply and Use Tables and International Trade Statistics have been harmonized, reconciled and used for estimation procedures to arrive at a consistent time series of WIOTs.

 

 

BUILDING EORA: A GLOBAL MULTI-REGION INPUT–OUTPUT DATABASE AT HIGH COUNTRY AND SECTOR RESOLUTION

Manfred Lenzen , Daniel Moran , Keiichiro Kanemoto & Arne Geschke
Published online: 21 Mar 2013
There are a number of initiatives aimed at compiling large-scale global multi-region input–output (MRIO) tables complemented with non-monetary information such as on resource flows and environmental burdens. Depending on purpose or application, MRIO construction and usage has been hampered by a lack of geographical and sectoral detail; at the time of writing, the most advanced initiatives opt for a breakdown into at most 129 regions and 120 sectors. Not all existing global MRIO frameworks feature continuous time series, margins and tax sheets, and information on reliability and uncertainty. Despite these potential limitations, constructing a large MRIO requires significant manual labour and many years of time. This paper describes the results from a project aimed at creating an MRIO account that represents all countries at a detailed sectoral level, allows continuous updating, provides information on data reliability, contains table sheets expressed in basic prices as well as all margins and taxes, and contains a historical time series. We achieve these goals through a high level of procedural standardisation, automation, and data organisation.

 

 

POLICY-RELEVANT APPLICATIONS OF ENVIRONMENTALLY EXTENDED MRIO DATABASES – EXPERIENCES FROM THE UK

Thomas Wiedmann & John Barrett
Published online: 21 Mar 2013
The impressive development in global multi-region input–output (IO) databases is accompanied by an increase in applications published in the scientific literature. However, it is not obvious whether the insights gained from these studies have indeed been used in political decision-making. We ask whether and to what extent there is policy uptake of results from environmentally extended multi-region IO (EE-MRIO) models and how it may be improved. We identify unique characteristics of such models not inherent to other approaches. We then present evidence from the UK showing that a policy process around consumption-based accounting for greenhouse gas emissions and resource use has evolved that is based on results from EE-MRIO modelling. This suggests that specific, policy-relevant information that would be impossible to obtain otherwise can be generated with the help of EE-MRIO models. Our analysis is limited to environmental applications of global MRIO models and to government policies in the UK.

 

From GLOBAL MULTIREGIONAL INPUT–OUTPUT FRAMEWORKS: AN INTRODUCTION AND OUTLOOK

GMRIO

 

From POLICY-RELEVANT APPLICATIONS OF ENVIRONMENTALLY EXTENDED MRIO  DATABASES – EXPERIENCES FROM THE UK

GMRIO2

From Economic Systems Research

Volume 26, 2014 – Issue 3: A Comparative Evaluation of Multi-Regional Input-Output Databases

CONVERGENCE BETWEEN THE EORA, WIOD, EXIOBASE, AND OPENEU’S CONSUMPTION-BASED CARBON ACCOUNTS

Daniel Moran & Richard Wood
Published online: 14 Jul 2014

In this paper, we take an overview of several of the biggest independently constructed global multi-regional input–output (MRIO) databases and ask how reliable and consonant these databases are. The key question is whether MRIO accounts are robust enough for setting environmental policies. This paper compares the results of four global MRIOs: Eora, WIOD, EXIOBASE, and the GTAP-based OpenEU databases, and investigates how much each diverges from the multi-model mean. We also use Monte Carlo analysis to conduct sensitivity analysis of the robustness of each accounts’ results and we test to see how much variation in the environmental satellite account, rather than the economic structure itself, causes divergence in results. After harmonising the satellite account, we found that carbon footprint results for most major economies disagree by<10% between MRIOs. Confidence estimates are necessary if MRIO methods and consumption-based accounting are to be used in environmental policy-making at the national level.

COMPARATIVE EVALUATION OF MRIO DATABASES

Satoshi Inomata & Anne Owen

Published online: 11 Aug 2014

This editorial is the introduction to a special issue of Economics Systems Research on the topic of intercomparison of multi-regional input–output (MRIO) databases and analyses. It explains the rationale for dedicating an issue of this journal to this area of research. Then the six papers chosen for this issue are introduced. This is followed by a concluding section outlining future directions for developers and users of MRIO databases.

 

Please see my related posts:

Accounting For Global Carbon Emission Chains

Development of Global Trade and Production Accounts: UN SEIGA Initiative

Stock Flow Consistent Models for Ecological Economics

 

 

Key Sources of Research:

 

The World Input‐Output Database (WIOD): Contents, Sources and Methods

Edited by Marcel Timmer (University of Groningen)

With contributions from:
Abdul A. Erumban, Reitze Gouma, Bart Los, Umed Temurshoev and
Gaaitzen J. de Vries (University of Groningen)
Iñaki Arto, Valeria Andreoni Aurélien Genty, Frederik Neuwahl, José
M. Rueda‐Cantuche and Alejandro Villanueva (IPTS)
Joe Francois, Olga Pindyuk, Johannes Pöschl and Robert Stehrer
(WIIW), Gerhard Streicher (WIFO)

April 2012, Version 0.9

Click to access WIOD_sources.pdf

 

 

 

Analyzing Global Value Chains using the World Input-Output
Database

Bart Los (University of Groningen)
with Marcel Timmer (Groningen), Gaaitzen de Vries
(Groningen) and Robert Stehrer (wiiw Vienna)

BBVA Foundation – Ivie Workshop, October 30, 2017, Valencia

Click to access B.-Los.pdf

 

An Overview on the Construction of North American Regional Supply-Use and Input-Output Tables and their Applications in Policy Analysis

Statistics Canada
Anthony Peluso
U.S. Bureau of Economic Analysis
Gabriel Medeiros
Jeffrey Young
U.S. International Trade Commission
Ross J. Hallren
Lin Jones
Richard Nugent
Heather Wickramarachi

ECONOMICS WORKING PAPER SERIES
Working Paper 2017-12-A

Click to access na-tiva_white_paper_for_posting_revised_02-20.pdf

 

 

 

 

The Global MRIO Lab – charting the world economy,

Manfred Lenzen, Arne Geschke, Muhammad Daaniyall Abd Rahman, Yanyan
Xiao, Jacob Fry, Rachel Reyes, Erik Dietzenbacher, Satoshi Inomata, Keiichiro Kanemoto, Bart Los, Daniel Moran, Hagen Schulte in den Bäumen, Arnold Tukker, Terrie Walmsley, Thomas Wiedmann, Richard Wood & Norihiko Yamano

(2017)

Economic Systems Research, 29:2, 158-186

Click to access Lenzen%20et%20al._2017_Economic%20Systems%20Research_The%20Global%20MRIO%20Lab–charting%20the%20world%20economy.pdf

 

 

 

 

INPUT–OUTPUT ANALYSIS: THE NEXT 25 YEARS,

Erik Dietzenbacher, Manfred Lenzen, Bart Los, Dabo Guan, Michael L. Lahr,
Ferran Sancho, Sangwon Suh & Cuihong Yang

(2013)

Economic Systems Research, 25:4, 369-389

Click to access Guan-ESR-2013-IO%20next%2025%20years.pdf

 

 

 

OECD Inter-Country Input-Output (ICIO) Tables, 2016 edition

http://www.oecd.org/sti/ind/inter-country-input-output-tables.htm

 

 

Trade in Value Added

OECD

http://www.oecd.org/sti/ind/measuringtradeinvalue-addedanoecd-wtojointinitiative.htm

 

 

 

The Global Resource Accounting Model (GRAM)
a methodological concept paper

Stefan Giljum a, Christian Lutz b, Ariane Jungnitz b

a Sustainable Europe Research Institute (SERI), Vienna, Austria
b Institute for Economic Structures Research (GWS), Osnabrück, Germany

April 2008

Click to access Giljum_et_al_GRAM_concept_paper_final.pdf

 

 

 

POLICY-RELEVANT APPLICATIONS OF
ENVIRONMENTALLY EXTENDED MRIO DATABASES – EXPERIENCES FROM THE UK,

Thomas Wiedmann & John Barrett

(2013):

Economic Systems Research, 25:1, 143-156

Click to access Wiedmann__Barrett_-_2013_-_Policy-relevant_applications_of_evironmentally_extended_MRIO_databases_-_experiences_from_the_UK.pdf

 

 

THE CONSTRUCTION OF WORLD INPUT–OUTPUT TABLES IN THE WIOD PROJECT,

Erik Dietzenbacher , Bart Los , Robert Stehrer , Marcel Timmer & Gaaitzen de
Vries

(2013)

Economic Systems Research, 25:1, 71-98,

Click to access WIOD%20construction.pdf

 

 

System of Environmental-Economic Accounting 2012— Applications and Extensions

http://ec.europa.eu/eurostat/documents/3859598/7789413/KS-01-15-797-EN-N.pdf/9404d9b0-5c2d-48c8-b1e9-2632800162e7

 

 

Calculating Trade in Value Added

IMF

Prepared by Aqib Aslam, Natalija Novta, and Fabiano Rodrigues-Bastos1

July 2017

https://www.imf.org/~/media/Files/Publications/WP/2017/wp17178.ashx

 

 

World Input-Output Network

Federica Cerina, Zhen Zhu, Alessandro Chessa and Massimo Riccaboni

July 1, 2015

Click to access 336.pdf

 

 

 

Making Global Value Chain Research More Accessible

Lin Jones, William Powers, and Ravinder Ubee1

U.S. International Trade Commission, Office of Economics

October 21, 2013

Click to access ec201310a.pdf

 

On the Measurement of Upstreamness and Downstreamness in
Global Value Chains

Pol Antras
Harvard University and NBER
Davin Chor
National University of Singapore

October 30, 2017

Click to access upstream_ac_oct30_2017_withtables.pdf

 

 

 

THE OECD INPUT-OUTPUT DATABASE: 2006 EDITION

STI WORKING PAPER 2006/8

Norihiko Yamano and Nadim Ahmad

Click to access OECD%20Input-Output%20Database.pdf

 

 

 

GLOBAL MULTI REGIONAL INPUT–OUTPUT FRAMEWORKS: AN INTRODUCTION AND OUTLOOK,

Arnold Tukker & Erik Dietzenbacher

(2013)

Econ omic Systems Research, 25:1,1-19

Click to access UNSD%20-%20Tukker%20-%20Overview%20on%20International%20IO%20Tables%20-%202013.pdf

 

THE CONSTRUCTION OF WORLD INPUT–OUTPUT TABLES IN THE WIOD PROJECT,

Erik Dietzenbacher , Bart Los , Robert Stehrer , Marcel Timmer & Gaaitzen de
Vries

(2013)

Economic Systems Research, 25:1, 71-98

Click to access WIOD%20construction.pdf

 

 

 

A review of recent multi-region input–output models used for consumption-based
emission and resource accounting

Thomas Wiedmann

2009

http://wedocs.unep.org/bitstream/handle/20.500.11822/19433/a_review.pdf?sequence=1&isAllowed=y

 

 

World Input-Output Network

Federica Cerina, Zhen Zhu, Alessandro Chessa, Massimo Riccaboni

2015

Click to access pone.0134025.pdf

 

 

A Network of Networks Perspective on Global Trade

Julian Maluck, Reik V. Donner

Click to access pone.0133310.pdf

 

 

 

THE ‘REST OF THE WORLD’ – ESTIMATING THE ECONOMIC STRUCTURE OF MISSING REGIONS IN GLOBAL MULTI-REGIONAL INPUT–OUTPUT TABLES,

Konstantin Stadler, Kjartan Steen-Olsen & Richard Wood

(2014)

Economic Systems Research, 26:3, 303-326

Click to access Stadler,%20Steen-olsen,%20Wood_2015_Unknown_the%20‘%20Rest%20of%20the%20World%20’%20–%20Estimating%20the%20Economic%20Structure%20of%20Missing%20Regions%20in%20Global%20Multi.pdf

 

 

“Trade, Environment, and Growth: Advanced topics in Input-Output Analysis”*

Professor: Erik Dietzenbacher (U. Groningen)

March 9-13, 2015

Click to access outline___trade_growth_and_the_environment_.pdf

 

 

 

 

Wassily Leontief and the discovery of the input-output approach

Click to access memo-18-2016-versjon-2.pdf

 

 

Networks of value added trade,

Amador, João; Cabral, Sónia

(2016)

ECB Working Paper, No. 1931, ISBN 978-92-899-2179-4,

Click to access ecbwp1931.pdf

 

EXIOPOL – DEVELOPMENT AND ILLUSTRATIVE ANALYSES OF A DETAILED GLOBAL MR EE SUT/IOT,

Arnold Tukker , Arjan de Koning , Richard Wood , Troy Hawkins , Stephan
Lutter , Jose Acosta , Jose M. Rueda Cantuche , Maaike Bouwmeester , Jan Oosterhaven ,
Thomas Drosdowski & Jeroen Kuenen

(2013)

Economic Systems Research, 25:1,50-70

Click to access Tukker%20et%20al._2013_Economic%20Systems%20Research_Exiopol%20–%20Development%20and%20Illustrative%20Analyses%20of%20a%20Detailed%20Global%20Mr%20Ee%20SutIot.pdf

 

 

 

The World Input-Output Database (WIOD) project

Robert Stehrer

OECD-WPTSG meeting

November 18, 2009 – OECD, Paris

Click to access 44197850.pdf

 

 

The World Input-Output Database (WIOD): Construction, Challenges and Applications

Abdul Azeez Erumbana, Reitze Goumaa, Bart Losa,b, Robert Stehrerc, Umed
Temurshoevb, Marcel Timmer a,b,*, Gaaitzen de Vries

Paper prepared for World Bank workshop
“The Fragmentation of Global Production and Trade in Value Added”,
June 9-10, 2011.

Click to access PAPER_13_Erumban_Gouma_Los_Stehrer_Temurshoev_Timmer_deVries.pdf

 

The World Input-Output Database: Content, Concepts and Applications.

Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R., & de Vries, G. J.

(2014).

GGDC Working Papers; Vol. GD-144).

Click to access gd144.pdf

 

 

Measuring Global Value Chains with the WIOD (World Input-Output Database)

Marcel Timmer

Groningen Growth and Development Centre
University of Groningen
(presentation at OECD conference,
Paris, 21 September, 2010)

Click to access 1-3_Timmer.pdf

 

 

 

Global value chains, trade, jobs, and environment: The new WIOD database

Hubert Escaith, Marcel Timmer

13 May 2012

https://voxeu.org/article/new-world-input-output-database

 

Wassily Leontief and the discovery of the input-output approach

Olav Bjerkholt

2016

Click to access 877412162.pdf

 

 

 

WHO PRODUCES FOR WHOM IN THE WORLD ECONOMY?

Guillaume Daudin (Lille-I (EQUIPPE) & Sciences Po (OFCE), Christine Rifflart, Danielle
Schweisguth (Sciences Po (OFCE))1

This version: July 2009

Click to access WP2009-18.pdf

 

 

 

An Anatomy of the Global Trade Slowdown based on the WIOD 2016 Release

Marcel P. Timmer, Bart Los,
Robert Stehrer, and Gaaitzen J. de Vries

December 2016

Click to access gd162.pdf

Credit Chains and Production Networks

Credit Chains and Production Networks

There are three kind of flows in a Supply Chain

  • Goods
  • Information
  • Financial

 

Credit Terms in a Supplier Buyer contracts determine payment delays which accumulate in current accounts of a Firm.

  • Account Receivables
  • Account Payables

 

Credit Relations

  • Bank to Bank
  • Bank to Firm
  • Firm to Firm

Dyad of Credit Relations

  • Supplier – Buyer

 

Triad of Credit Relations

  • Supplier – Bank – Buyer

Sources of Systemic Risk

  • Failure of a Firm and its impact on Suppliers and Customers (Flow of Goods)
  • Failure of a Bank and its impact on Trade Credit
  • Credit Contraction due to de-risking by the Banks
  • Decline in Correspondent Banking relations and its impact on Trade Finance

 

From Credit Chains and Sectoral Co-movement: Does the Use of Trade
Credit Amplify Sectoral Shocks?

Trade credit is an important source of short-term financing for firms, not only in the U.S., as documented by Petersen and Rajan (1997), but also around the World. For instance, accounts payables are larger than short-term debt in 60 percent of the countries covered by Worldscope. Also, across the world most firms simultaneously receive credit from their suppliers and grant it to their customers, which tend to be concentrated on specific sectors.  These characteristics of trade credit financing have led some authors to propose it as a mechanism for the propagation and amplification of idiosyncratic shocks. The intuition behind the mechanism is straightforward; a firm that faces a default by its customers may run into liquidity problems that force it to default to its own suppliers. Therefore, in a network of firms that borrow from each other, a temporary shock to the liquidity of some firms may cause a chain reaction in which other firms also get in financial difficulties, thus resulting in a large and persistent decline in aggregate activity. This idea was first formalized by Kiyotaki and Moore (1997) in a partial equilibrium setting, and has been recently extended to a general equilibrium environment by Cardoso-Lecourtois (2004), and Boissay (2006) who have also provided evidence of the potential quantitative importance of the mechanism by calibrating their models to the cases of Mexico and the U.S., respectively.

From Ontology of Bankruptcy Diffusion through Trade Credit
Channel

A supply network is a network of entities interacting to transform raw material into finished product for customers. Since interdependencies among supply network members on material, information, and finance are becoming increasingly intensive, financial status of one firm not only depends on its own management, but also on the performance and behaviours of other members. Therefore, understanding the financial flows variability and the material interactions is a key to quantify the risk of a firm. Due to the complex structure and dynamic interactions of modern supply networks, there are some difficulties faced by pure analysis approaches in analyzing financial status of the supply network members and the high degree of nonlinear interactions between them. Mathematical and operation research models usually do not function very well for this kind of financial decision making. These models always start with many assumptions and have difficulties modeling such complex systems that include many entities, relationships, features, parameters, and constraints. In addition, traditional modeling and analysis tools lack the ability to predict the impact of a specific event on the performance of the entire supply network.  Current financial data analysis with large volumes of structure data cannot offer the full picture and intrinsic insights into the risk nature of a company. Motivated by the literature gap in risk monitoring in investment background and limitations of analysis approaches for handling bankruptcy contagion phenomenon, we propose an ontological approach to present a formal, shared conceptualization of this domain knowledge.

From Inter-Firm Trade Finance in Times of Crisis

The severe recession that is hitting the global economy, with very low or even negative growth rates, has caused widespread contractions in international trade, both in developed and developing countries. World Trade Organization (WTO) has forecast that exports will decline by roughly 9% in volume terms in 2009 due to the collapse in global demand brought on by the biggest economic downturn in decades. The contraction in developed countries will be particularly severe with exports falling by 10%. In developing countries, which account for one-third of world trade, exports will shrink by some 2% to 3% in 2009.

The contraction in international trade has been accompanied by a sharp decline in the availability of trade finance. This decline is only partly explained by the contraction in demand: according to a BAFT (Banker’s Association for Trade and Finance) and International Monetary Fund (IMF) joint survey (2009), flows of trade finance to developed countries have fallen by 6% relative to the previous year, more than the reduction in trade flows, suggesting that part of the fall reflects a disruption of financial intermediation. The contraction in value of trade finance has also been accompanied by a sharp increase in its price. Fear that the decline in trade finance and the increase in its cost would accelerate the slowdown of world trade has triggered a number of government initiatives in support of trade finance (Chauffour and Farole,2009).

The situation is especially worrisome for firms operating in developing countries which rely heavily on trade finance to support both their exports and imports.1 With a restricted access to financing and an increased cost of financing, these firms may find difficulties in maintaining their production and trade activities.

 

Please see my related posts:

Supply Chain Finance (SCF) / Financial Supply Chain Management (F-SCM)

Production Chain Length and Boundary Crossings in Global Value Chains

Intra Industry Trade and International Production and Distribution Networks

Understanding Trade in Intermediate Goods

Trends in Intra Firm Trade of USA

Production and Distribution Planning : Strategic, Global, and Integrated

Development of Global Trade and Production Accounts: UN SEIGA Initiative

The Dollar Shortage, Again! in International Wholesale Money Markets

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

Understanding Global Value Chains – G20/OECD/WB Initiative

Economics of Trade Finance

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Oscillations and Amplifications in Demand-Supply Network Chains

Contagion in Financial (Balance sheets) Networks

 

Key Sources of Research:

 

LIQUIDITY, BUSINESS CYCLES, AND MONETARY POLICY

Nobuhiro Kiyotaki
London School of Economics

John Moore
Edinburgh University and London School of Economics

27 November 2001

Click to access kimo.pdf

 

 

Credit Cycles

Nobuhiro Kiyotaki; John Moore

The Journal of Political Economy, Vol. 105, No. 2.

(Apr., 1997),

Click to access km.pdf

 

Credit chains

Nobuhiro Kiyotaki (Princeton University)

John Moore (University of Edinburgh)

Date January 1997

Click to access id118_esedps.pdf

Click to access Kiyotaki_CreditChains.pdf

 

 

Credit and Business Cycles

N Kiyotaki

1998

Click to access Credit-and-BusinessCycles.pdf

 

 

Inter-Enterprise Credit and Adjustment  During Financial Crises: The Role of Firm Size

Fabrizio Coricelli

Marco Frigerio

July, 2 2016

Click to access Coricelli%2C%20Fabrizio%20paper.pdf

 

 

Credit chains and bankruptcy propagation in production networks

Stefano Battiston, Domenico Delli Gatti, Mauro Gallegati,
Bruce Greenwald, Joseph E. Stiglitz

2007

Click to access 2007_Credit_Chains.pdf

 

 

Trade Finance in Crisis : Market Adjustment or Market Failure ?

Jean-Pierre Chauffour

Thomas Farole

Date Written: July 1, 2009

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1437955

Resaleable debt and systemic risk

Jason Roderick Donaldson , Eva Micheler

2018

Click to access Donaldson-Micheler-Resaleable_Debt.pdf

 

Supply chains and credit-market shocks: Some implications for emerging markets,

Jinjarak, Yothin (2013)

ADBI Working Paper Series, No. 443

Click to access 770887406.pdf

 

 

Financial Amplification Mechanisms and the Federal Reserve’s Supply of Liquidity during the Crisis

Asani Sarkar
Jeffrey Shrader

Staff Report no. 431
February 2010

Click to access sr431.pdf

 

 

Aggregate Fluctuations and the Role of Trade Credit

Lin Shao

2017

Click to access swp2017-37.pdf

 

 

Supply Chain Disruptions and Trade Credit

LU Yi OGURA Yoshiaki

TODO Yasuyuki ZHU Lianming

2017

Click to access 17e054.pdf

 

 

Credit Shocks and Aggregate Fluctuations in  an Economy with Production Heterogeneity

Aubhik Khan

Julia K. Thomas

September 2013

Click to access KhanThomasDCTsept2013.pdf

 

 

Financial Frictions in Production Networks

Saki Bigio

Jennifer La’O

February 7, 2013

Click to access FinancialFrictionsNetworks.pdf

 

Working Paper No. 67, April 2016

Click to access WP-67.pdf

 

 

The Origins of Aggregate Fluctuations in a Credit Network Economy

Levent Altinoglu

October 16, 2016

Click to access Altinoglu_JMP_CurrentVersion.pdf

September 30, 2015

Click to access fcb800d01a5b8dce9ed13a4a200bf51f6fed.pdf

 

Consolidated Bibliography

WTO

Click to access aid4tradesupplychain13_biblio_e.pdf

 

 

Propagation of Financial Shocks in an Input-Output Economy with Trade and Financial Linkages of Firms

Shaowen Luo

December 4, 2015

Click to access Luo.pdf

 

FDI, Trade Credit, and Transmission of Global Liquidity Shocks:
Evidence from Chinese Manufacturing Firms

Shu Lin and Haichun Ye

Click to access Lin–Ye_paper.pdf

 

 

Trade Credit, Financing Structure and Growth

Junjie Xia

October 27, 2016

Click to access jmp_oct16.pdf

 

The impact of corporate distress along the supply chain: evidences from United
States

Lucia Gibilaro

Gianluca Mattarocci

Click to access EFMA2017_0526_fullpaper.pdf

 

 

Does credit crunch investments down?
New evidence on the real eects of the bank-lending channel

Federico Cinganoz Francesco Manaresix Enrico Settex

December 2013

Click to access Credit_crunch_investments.pdf

 

Interwoven Lending, Uncertainty, and Liquidity Hoarding

Adam Zawadowski

December 13, 2017

Click to access credit.pdf

 

 

Trade credit: Elusive insurance of rm growth

DENNIS BAMS, JAAP BOS and MAGDALENA PISA*

October 5, 2016

Click to access Trade%20credit%20Elusive%20insurance%20of%20firm%20growth%202016.pdf

 

 

Chain Reactions, Trade Credit and the Business Cycle

Miguel Cardoso-Lecourtois

Click to access up.4593.1075462930.pdf

 

From production networks to geographical economics.

Gérard Weisbuch, Stefano Battiston.

Journal ofEconomic Behavior and Organization, Elsevier, 2007, 64 (3- 4), pp.448

https://hal.archives-ouvertes.fr/hal-00531863/document

 

 

Production networks and failure avalanches

Gerard Weisbuch
Stefano Battiston

March 5, 2018

Click to access 0507101.pdf

 

 

Self-organised patterns in production networks

Gerard Weisbuch

October 10, 2005

Click to access gwcomplexus.pdf

 

 

Networks : Propagation of Shocks over Economic Networks

Daron Acemoglu

July 22, 2014.

https://economics.mit.edu/files/9790

 

 

Debt-Rank Analysis of Financial Distress Propagation on a Production Network in Japan

FUJIWARA Yoshi
University of Hyogo
TERAI Masaaki
RIKEN
FUJITA Yuji
Turnstone Research Institute, Inc.
SOUMA Wataru
Nihon University

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Operational causes of bankruptcy propagation in supply chain

Zhongsheng Hua ⁎, Yanhong Sun 1, Xiaoyan Xu

2011

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Propagation of Financial Shocks in an Input-Output Economy with Trade and Financial Linkages of Firms

Shaowen Luo
September 20, 2015

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From Micro to Macro via Production Networks

Vasco M. Carvalho

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Trade Credit and the  Propagation of Corporate Failure: An Empirical
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Tor Jacobson and Erik von Schedvin
August 2012

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CREDIT MARKET DISRUPTIONS AND LIQUIDITY SPILLOVER EFFECTS IN THE SUPPLY CHAIN

Anna M. Costello

August 8, 2017

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Modeling defaults of companies in multi-stage supply chain networks

Kamil J.Mizgier, StephanM.Wagner,, JanuszA.Holyst

2010

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The origins of scale-free production networks

Stanislao Gualdizand Antoine Mandelx

June 28, 2015

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Optimization of order policies in supply networks

S. GÄottlich¤ M. Hertyy C. Ringhoferz

August 18, 2008

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Financial Instability after Minsky: Heterogeneity, Agent Based Models and Credit
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Domenico Delli Gatti

April 10, 2012

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Measuring the Systemic Risk in Inter firm Transaction Networks

Makoto Hazama
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Systemic Risk Assessment in Complex Supply Networks

Anna Ledwoch, Alexandra Brintrup, J¨orn Mehnen, Ashutosh Tiwari

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TRADE CREDIT DEFAULTS AND LIQUIDITY PROVISION BY FIRMS

Reint Gropp
Frédéric Boissay

2007

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The future of agent-based modelling.

Matteo Richiardi

Institute for New Economic Thinking and Nuffield College, Oxford, United Kingdom
Collegio Carlo Alberto, Moncalieri, Italy

This draft: June 2015

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Financially Constrained Fluctuations in an Evolving Network Economy

Domenico Delli Gatti
Mauro Gallegati
Bruce Greenwald
Alberto Russo
Joseph E. Stiglitz

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Credit Chains and Sectoral Comovement: Does the Use of Trade Credit Amplify Sectoral Shocks?

Claudio Raddatz

The World Bank
March, 2007

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Linkages and spillovers in global production networks: firm-level analysis of the Czech automotive industry

Petr Pavlinek

Pavla Žížalová

https://digitalcommons.unomaha.edu/cgi/viewcontent.cgi?article=1039&context=geoggeolfacpub

 

Ontology of Bankruptcy Diffusion through Trade Credit
Channel

Lin Cheng

Huaiqing Wang

Huaping Chen

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OPTIMAL ORDER AND DISTRIBUTION STRATEGIES IN PRODUCTION NETWORKS

Simone Gottlich, Michael Herty, and Christian Ringhofer

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Profitability, Trade Credit and Institutional Structure of Production

Michael Gofman
December 9, 2013

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The Economics of Information and Financial
Networks

Stefano Battiston
July 22, 2016

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Supply Chain Perspectives and Issues: A Literature Review

Albert Park
Gaurav Nayyar
Patrick Low

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LIAISONS DANGEREUSES: INCREASING CONNECTIVITY, RISK SHARING, AND SYSTEMIC RISK

Stefano Battiston
Domenico Delli Gatti
Mauro Gallegati
Bruce C. Greenwald
Joseph E. Stiglitz

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Inter-Firm Trade Finance in Times of Crisis

Anna Maria C. Menichini

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Reducing the Probability of Bankruptcy Through Supply Chain Coordination

Xiaoyan Xu, Yanhong Sun, and Zhongsheng Hua

2010

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Pathways towards instability in financial networks

Marco Bardoscia, Stefano Battiston Fabio Caccioli & Guido Caldarelli

2017

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International Credit Supply Shocks

Ambrogio Cesa-Bianchiy Andrea Ferreroz Alessandro Rebuccix

June 16, 2017

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Risk Propagation through Payment Distortion in Supply Chains

Alejandro Serrano

Rogelio Oliva

Santiago Kraiselburd

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Payment Defaults and Interfirm Liquidity Provision

https://academic.oup.com/rof/article-abstract/17/6/1853/1591419

 

SYSTEMIC RISK: A SURVEY

BY OLIVIER DE BANDT
AND PHILIPP HARTMANN

November 2000

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Risk Propagation in Supply Chains

Alejandro Serrano

Rogelio Oliva

Santiago Kraiselburd

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How Inventory Is (Should Be) Financed: Trade Credit in Supply Chains with Demand
Uncertainty and Costs of Financial Distress

Song (Alex) Yang, John R. Birge

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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2746645

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1734682

 

 

The Supply Chain Effects of Bankruptcy

S. Alex Yang

John R. Birge, Rodney P. Parker

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http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.715.5812&rep=rep1&type=pdf

 

Supply Chain Management: Supplier Financing Schemes and Inventory Strategies

Min Wang

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Foreign Investment and Supply Chains in Emerging Markets: Recurring Problems and Demonstrated Solutions

Theodore H. Moran

PIIE

2014

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Improving cash flow using credit management
The outline case

Click to access cid_improving_cashflow_using_credit_mgm_Apr09.pdf.pdf

 

CREDIT CHAINS AND THE PROPAGATION OF
FINANCIAL DISTRESS

2006

by Frederic Boissay

Click to access ecbwp573.pdf

 

Exposure to international crises: trade vs. financial contagion

Everett Grant

2016

https://www.esrb.europa.eu/pub/pdf/wp/esrbwp30.en.pdf?7b7cc950c1a2286d395ed8489bfde5c7

 

 

Credit Contagion and Trade Credit Supply:
Evidence from Small Business Data in Japan

TSURUTA Daisuke

Click to access 07e043.pdf

 

 

The Price of Complexity in Financial Networks

Joseph Stiglitz

2017

Click to access The%20Price%20of%20Complexity%20in%20Financial%20Networks.pdf

 

 

The Price of Complexity in Financial Networks

S. Battiston

2017

Click to access 160913_slides_battison.pdf