The project aims at investigating the growing interdependency of social and economic relationships among world countries using a network approach. It proposes a simple stochastic model of network formation and evolution, to describe the structure and dynamic properties of international trade, and uses it as a benchmark against which to test the performance of each country.
The ability of European countries to respond to the challenge posed by the emergence of new big players in the world economy depends crucially on our understanding of the dynamics of such a phenomenon.
- WP1 (months 1-2): data collection and preparation. Data on bilateral trade flows will be collected and organized for the analysis. The main source will be the BACI dataset maintained by CEPII (http://www.cepii.fr/anglaisgraph/bdd/baci.htm);
- WP2 (months 3-6): data analysis. In this phase the data will be analyzed to uncover relevant empirical regularities to be matched by the model. In particular the analysis will look at:
- the relationship between the number of product exported, the average size of export flows, and the volatility of export growth
- the relationship between the intensive and the extensive margin of trade
- the distribution of the dollar value of bilateral trade flows, that underlies the fact that the most popular products/destinations make up a disproportionate share of total trade
- the distribution of the number of products imported/exported by each country
- the number of zeros in trade data
- WP3 (months 7-10): simulation of the model. A model of network formation and growth will be developed and simulated, using different parameter settings to match the stylized facts identified in WP2;
- WP4 (months 11-12): policy implications. Results from the empirical analysis and the simulations will be used to derive a set of policy prescriptions in terms of industrial and trade policy, aiming at strengthening European competitiveness.
Banca Intesa Sanpaolo
- At least one paper to be submitted to a peer-review international journal.
- A report on the policy implications.