The Impact of Node Addition and Deletion on Network Production Fluctuations

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Date

15 mai 2025

Type de document
Périmètre
Identifiant
  • 2505.10154
Collection

arXiv

Organisation

Cornell University




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Mahdi Kohan Sefidi, « The Impact of Node Addition and Deletion on Network Production Fluctuations », arXiv - économie


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Production networks, dynamic systems of firms linked through input-output relationships, transmit microeconomic shocks into macroeconomic fluctuations. While prior studies often assume static networks, real-world economies feature continuous firm entry (node addition) and exit (node deletion). We develop a probabilistic model to analyze how these dynamics affect production volatility and network resilience. Integrating Leontief input-output frameworks with controllability theory. By quantifying fluctuations as expected values under probabilistic node dynamics, we identify trade-offs between adaptability and stability. Methodologically, we unify Kalman rank criteria and minimum input theory, offering policymakers insights to balance innovation-driven entry with safeguards against destabilizing exits.

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