2014/09/23 by Assaf Almog, Tiziano Squartini, Diego Garlaschelli · 1 citation
Computer Science · Economics, Econometrics and Finance · Mathematics · Physics and Astronomy · #Binary number #Complex Network Analysis Techniques #Computational Drug Discovery Methods #Computer science #Econometrics #Economic and Technological Innovation #Economics #Generalization #Gross domestic product #Macroeconomics #Mathematics #Node (physics) #Physics #Representation (politics) #Shock (circulatory) #Topology (electrical circuits) #Unification #physics.soc-ph #q-fin.GN
paper · pdf · doi:10.1088/1367-2630/17/1/013009
published as New J. Phys. 17, 013009 (2015)
arxiv created 2014/09/23 · openalex publication_date 2015/01/09 · arxiv updated 2015/02/23 · openalex created_date 2016/06/24 · openalex updated_date 2026/08/06
Recent events such as the global financial crisis have renewed the interest in the topic of economic networks. One of the main channels of shock propagation among countries is the International Trade Network (ITN). Two important models for the ITN structure, the classical gravity model of trade (more popular among economists) and the fitness model (more popular among networks scientists), are both limited to the characterization of only one representation of the ITN. The gravity model satisfactorily predicts the volume of trade between connected countries, but cannot reproduce the missing links (i.e. the topology). On the other hand, the fitness model can successfully replicate the topology of the ITN, but cannot predict the volumes. This paper tries to make an important step forward in the unification of those two frameworks, by proposing a new gross domestic product (GDP) driven model which can simultaneously reproduce the binary and the weighted properties of the ITN. Specifically, we adopt a maximum-entropy approach where both the degree and the strength of each node are preserved. We then identify strong nonlinear relationships between the GDP and the parameters of the model. This ultimately results in a weighted generalization of the fitness model of trade, where the GDP plays the role of a 'macroeconomic fitness' shaping the binary and the weighted structure of the ITN simultaneously. Our model mathematically explains an important asymmetry in the role of binary and weighted network properties, namely the fact that binary properties can be inferred without the knowledge of weighted ones, while the opposite is not true.