Reconstructing firm-level interactions in the Dutch input–output network from production constraints
Scientific Reports, vol. 12, pp. 11847
Abstract
Recent crises have shown that the knowledge of the structure of input-output networks, at the firm level, is crucial when studying economic resilience from the microscopic point of view of firms that try to rewire their connections under supply and demand constraints. Unfortunately, empirical inter-firm network data are protected by confidentiality, hence rarely accessible. The available methods for network reconstruction from partial information treat all pairs of nodes as potentially interacting, thereby overestimating the rewiring capabilities of the system and the implied resilience. Here, we use two big data sets of transactions in the Netherlands to represent a large portion of the Dutch inter-firm network and document its properties. We, then, introduce a generalized maximum-entropy reconstruction method that preserves the production function of each firm in the data, i.e. the input and output flows of each node for each product type. We confirm that the new method becomes increasingly more reliable in reconstructing the empirical network as a finer product resolution is considered and can, therefore, be used as a realistic generative model of inter-firm networks with fine production constraints. Moreover, the likelihood of the model directly enumerates the number of alternative network configurations that leave each firm in its current production state, thereby estimating the reduction in the rewiring capability of the system implied by the observed input-output constraints.
Authors 6
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Leonardo Niccolò Ialongo corresponding
IMT School for Advanced Studies Lucca · Scuola Normale Superiore · ABN AMRO Bank N.V. (Netherlands)
Affiliation as printed
ABN AMRO Bank N.V., Amsterdam, 1082 PP, The Netherlands. leonardo.ialongo@sns.it
IMT School for Advanced Studies, Lucca, 55100, Italy. leonardo.ialongo@sns.it
Scuola Normale Superiore, Pisa, 56126, Italy. leonardo.ialongo@sns.it
ABN AMRO Bank N.V., Amsterdam, 1082 PP, The Netherlands
IMT School for Advanced Studies, Lucca, 55100, Italy
Scuola Normale Superiore, Pisa, 56126, Italy
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Affiliation as printed
ING Bank N.V., Amsterdam, 1102 CT, The Netherlands
Lorentz Institute for Theoretical Physics (LION), University of Leiden, Leiden, 2333 CA, The Netherlands
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IMT School for Advanced Studies Lucca · ABN AMRO Bank N.V. (Netherlands)
Affiliation as printed
ABN AMRO Bank N.V., Amsterdam, 1082 PP, The Netherlands
IMT School for Advanced Studies, Lucca, 55100, Italy
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ABN AMRO Bank N.V. (Netherlands)
Affiliation as printed
ABN AMRO Bank N.V., Amsterdam, 1082 PP, The Netherlands
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IMT School for Advanced Studies Lucca · University of Amsterdam
Affiliation as printed
IMT School for Advanced Studies, Lucca, 55100, Italy
Institute for Advanced Study (IAS), University of Amsterdam, Amsterdam, 1012 GC, The Netherlands
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Leiden University · IMT School for Advanced Studies Lucca
Affiliation as printed
IMT School for Advanced Studies, Lucca, 55100, Italy
Lorentz Institute for Theoretical Physics (LION), University of Leiden, Leiden, 2333 CA, The Netherlands
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