The network origins of aggregate fluctuations: A demand-side approach

We construct a model of cyclical growth with agent-based features designed to study the network origins aggregate fluctuations from demand-side perspective. In our model, result variations in investment behaviour at firm level motivated by endogenously-generated changes ‘animal spirits’. addition being influenced their own economic conditions, firms pay attention performance first-degree neighbours, weighted (to differing degrees) centrality these neighbours network, when revising animal spirits. This allows us analyse effects linked on amplitude fluctuations. show that is significantly affected eigenvector centrality, and weight attached neighbours. The dispersion this effect about its mean shown be similarly important, resulting possibility properties can ‘great moderations’ giving way sudden increases volatility performance.