Research Statement
Working Papers:
We explore private public good provision in a directed network to which agents are harmed by actions of incoming neighbours. We discuss specific core-periphery network properties in relation to interdependence and Nash action by agents. For utilitarian welfare, we find neutrality of intervention policies that create or reduce frictions. Policies that provide subsidies to spillover on the other hand, raises welfare. Aggregating these results leaves us with the conclusion that there exist avenues for cost effective resource transfer policy. In the later part, we show significant relationship between a agents centrality measured by weaker negative externality and welfare improvement due to such subsidy.
Market frictions are so far prominent in general equilibrium analyses. Due to recent increasing prominence in the analyses of the role of financial networks and systemic risk in predicting and modelling financial systems and crises thereof, this paper incorporate homogeneous transaction costs as an example of market frictions into the clearing equilibrium under Eisenberg and Noe (2001). Then the paper moves further to access the impact of this equilibrium on threat indexes of nodes as formulated by Demange (2016). Results show most importantly that under certain conditions, greater frictions do possess the ability to alter threat index rankings of firms and as such, would give more power/impact to other firms whom in absence of such friction, that might as impactful.
This paper models interactions of banks in a pre-trading(fixed inter-bank network of lending/borrowing) period whereby banks are allotted fixed lending rates based on a combinations of all banks rate submission. We show evidence of strategic substitution in the rate each bank submits and more fundamentally, show that the rates submitted by each bank is likened to results from a private provision of public good game. Behaviors arising form the model could be likened to banks who desire to manipulate Inter-bank offered rates (Such as the Libor and Euribor) and thus add to its understanding
Systemic risk and default contagion have increasingly gained attention following the last financial crisis of 2008. This paper contributes to the literature on the role of strategic interactions in financial networks. Our model introduces default punishments in form of penalties that represent pecuniary and non-pecuniary costs faced by defaulting firms. Primarily, this paper captures decisions from fragile financial networks and thus has attributes of events such as default cascade/contagion so as to gather a basic intuition. We first investigate the existence of a Nash equilibrium. We then analyse the role of the network of financial liabilities on default decisions and on the free riding behavior of firms.
This work shows private provision of public goods game under Gorman polar form preferences which are specific to instances where networks are directed and weighted. We highlight Nash Equilibrium under unconstrained and constrained provision as a generalization of Bramoulle and Kranton (2007) as well as Allouch and King (2018). We further emphasise on the relationship between weighted links and a Nash equilibrium with full active contributions as well as intermediate contribution.