Seminar in International Economics: Production and Financial Networks in Interplay

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

Production and Financial Networks in Interplay

Kenan Huremovic
IMT School for Advanced Studies

Tuesday, 25th of April 2023, 3:00 pm (CEST)
Venue: Online via Zoom

Abstract:
We show that bank shocks originating in the financial sector propagate upstream and downstream along the production network. Our identification relies on the universe of both supplier-customer transactions and bank loans in Spain, a standard operationalization of credit-supply shocks during the 2008–09 global crisis, and the proposed theoretical framework. The impact on real effects is strong, and similarly so, when considering: (i) direct bank shocks to firms versus first-order interfirm contagion; (ii) first-order versus higher-order network effects; (iii) downstream versus upstream propagation; (iv) firm-specific versus economy-wide shocks. We develop a general equilibrium model to rationalize our findings. We estimate structural parameters of the model and verify that several testable predictions of the model hold in the data.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.